The Spring 2021 market is hot and competitive! So should your clients submit an offer with no contingencies to maintain an edge over competing offers?
Here’s a look at the pros and cons of removing contingencies early:
Pros
– May help your offer win a bidding war or multiple-offer situation
– Sellers feel that your offer may be less risky and no foreseeable roadblocks to closing escrow
– Savvy clients may feel more comfortable with the real estate process
Cons
– Buyers have no legal protections if they choose to cancel the purchase contract
– Loss of Earnest Money Deposit (EMD) and other financial liabilities
– If the deal doesn’t go through, the property must be relisted to be resold
– Removing loan/appraisal contingencies mean that the buyers have to financially come into the transaction with the difference between the offer price and the appraised value
It is important that all parties understand the terms and conditions of the contract that they are signing—including the possible legal consequences of keeping their contingencies or removing them. Your clients may seek advice from you to determine which contingencies to keep and which ones may be “safe” to remove in the offer to ensure they are making a wise purchase.
This is when your broker advice is ultimately important. Some companies may blanket approve or other companies, like Real Estate eBroker, have the purchasers sign an Acting Against Broker’s Advice when removing important contingencies up-front before truly having an opportunity to inspect the property. This might protect you and your company against liability.
To learn more about how REeBroker Group can help you assist your clients with transaction contingencies, visit Mentor Program (reebroker.com).
