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Saturday, August 06, 2016

Buying a Home in Florida - Contingencies Can Be a Deal Breaker!

In a real estate market that favors sellers it is often the contingencies that cause offers to not get accepted.  But some contingencies are good and some are less than good (I did not say bad specifically).

In a seller's market buyers should limit contingencies to those necessary to protect their interest in the process.   Of course, price is a key consideration but the highest offer is not always the best offer.

Still, while most offers are prepared and presented as "as is" offers there are necessary contingencies.   Read "What does "as is" really mean?"

What are necessary contingencies?

Probably number one is the inspection contingency.  This is a key protection...sort of a get out of jail free card.

Here in Florida the property inspection does not have a pass or fail grade assigned by the inspector.   The inspection results are evaluated subjectively by the buyer only.

And even if there are issues that arise during the inspection they can often be addressed by the seller to accommodate the buyer.  This may be accomplished by having repairs made (Why would a seller make repairs on an "as is" contract?), offering a concession  or even lowering the contract price.

The nature of an issue and motivation of the buyer and seller go a long way to deciding if the buyer "plays" the get out of jail free card and walks.

Another key contingency is the appraisal contingency.  This is especially important when there will be financing.  Still, even a cash buyer may want an appraisal contingency to be reassured the property is valued at the price being paid.

Appraisals can be an issue in a market where the selling prices are rising (like Brevard County, Florida).   Appraisals deal with what has sold already - not what is selling next week!

Like the inspection contingency there are "work arounds" to a low appraisal.  Many times the seller will adjust the contract price downward.  Sometimes the buyers will put additional monies down. 

Then sometimes, due to circumstances or a buyer's lack of emotional attachment to a property the buyer will walk.  Again, it is always dependent on buyer and seller motivation.

Depending on circumstances there may be other necessary contingencies.  Your real estate agent will recommend those based on your circumstances and the specific property (insurance).   One quick reminder to buyers...get your own agent - not the listing agent who works for the seller.

Getting a transaction to closing requires work by all parties.  For that reason I encourage sellers to heed these words... “Never quit looking for buyers until the deal closes.”

Ready to buy or sell a home in Viera, Florida?  Call or text me at 321-693-3850.

If you prefer, send me an email.

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