In a market where many sellers receive multiple offers, buyers who have their heart set on a particular property need a winning strategy. The Regional Sales Contract is used for the vast majority of re-sales in D.C. and Maryland and arms agents with many “if” clauses, called “contingencies,” to protect either their buyers or their sellers. In a normal market, a buyer looking to purchase a condominium downtown would probably have an inspection contingency, an appraisal contingency, a finance contingency as well as a review of the condominium’s documents. In this market, however, buyers are waiving protections to secure properties.
A seller’s worst fear is to have to go back to market after a contract falls through, and having to explain why; it makes buyers suspicious and often hurts the seller’s bottom line. As such, the more certainty a buyer can give a seller, that is, the fewer “if” clauses, the better positioned the buyer is to win. Home sale contingencies are generally a no-go on hot properties – so you’re usually best to have your place sold or under contract before you buy. Cash is king in the financing realm, but just because a cash offer is on the table doesn’t mean you can’t beat it with a higher price and strong financing. I recently helped a buyer beat a cash offer with an escalation clause and a modified appraisal contingency.
The appraisal contingency and finance contingency seem to function in tandem but the reality is that there are times where you can use one without necessarily needing the protection of the other. A strong down payment puts you in a better position to waive contingency clauses. It is important that your agent is an expert in the Regional Sales Contract – a savvy listing agent can see through rookie contract tricks but a creative and experienced buyer’s agent can help you make the best and most effective uses of the clauses available.
Sellers want you to have as few outs as possible, so they love not having to contend with a home inspection contingency. Waiving a home inspection can be a dangerous game, but the risk largely depends on the type of property. If you do so on a single family home, you could be tempting fate and run into a slew of trouble. On a certain vintage of condominium where the HVAC is the responsibility of the building and your largest risk is usually a faulty appliance or older electrical box, you may consider buying a home warranty with appliance coverage in lieu of inspecting. The important thing to know is what could go wrong and whether you have the financial means and will to correct an issue that may arise.
Pre-inspections, where the buyer conducts an inspection prior to making an offer and thus can proceed without the home inspection contingency, are a popular alternative. Wise listing agents often refuse to allow them. If a material defect the seller did not previously have knowledge of arises in a pre-inspection, and the buyer’s agent sends the report to the listing agent, the seller will have the added burden of disclosing it to all potential buyers. A general inspection contingency — otherwise thought of as a “take it or leave it” inspection, often an appealing option to a seller — it gives the buyer the right to walk away if they don’t like what they find in an inspection, but not to nickel and dime the seller for small ticket items. From a practical perspective, almost any major defect you discover will need to be disclosed to a future buyer, so sellers sometimes end up correcting major issues even when buyers have agreed to “take it or leave it” to avoid losing a contract.
Nothing will guarantee you a win in a multiple offers situation, but there are things you can do to increase your chances. In addition to a flexible settlement schedule and a can-do attitude, your best weapon aside from cash is an experienced agent who truly understands how the mechanics of the contract works and can help you navigate the process. Happy hunting!
Sammy Dweck, with Evers & Co. Real Estate, Inc. is a top-producing real estate agent specializing in residential re-sales in the D.C. metro area. Reach him at Sammy@sammydweck.com or 202-716-0400.