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SF Gate features Alina Aeby in Sound Off

Sound Off: What is the danger and benefit to waiving contingencies?

A: Non-contingent offers have been a normal occurrence for the past few years in the Bay Area real estate environment. Armed with comprehensive inspection reports and disclosures, sellers and listing agents alike expect offers as “clean” as possible.

The non contingencies offer expectations extend to the appraisal and loan as well, even if the buyers need a loan.

Most buyers peruse through the disclosure packages prior to making an offer, ask questions in advance, take a contractor along for an opinion before the offer date and make sure they understand the neighborhood’s value. As for the loan contingency, the most daring and burned out in the house hunting process might give in as well.

How safe is this practice? Is it really that easy to lose your deposit as a buyer? Not so fast.

For one thing, a buyer can make an inspection non-contingent offer and then elect to have inspections for informational purposes anyway.

Sometimes reports differ and if a new issue is found, there is a new element introduced in the contract. At that point, depending how severe and pressing the issue is, a seller might reconsider, renegotiate or simply let the buyer withdraw with the deposit.

What about the appraisal and the loan contingencies? Non-appraisal contingencies offers are the norm, but we all know that many times if the appraisal report is not satisfactory to the lender, the entire loan could be in jeopardy. As for the loan contingency, I usually prefer my buyers to have it, but let’s say they feel confident enough to wave it, it’s still not easy to keep that initial deposit if you are the sellers.

In most cases, even if the deposit stays in escrow and being disputed, the seller has to market the property again and try to receive the same price the initial buyer offered. If that is not possible and if the offer is lower, a case can be made for keeping the deposit as to compensate the difference.

We have plenty of consumer protection laws, however, if disputes arise, it could be a stressful and costly proposition, as legal advise is necessary at that point.

Alina Aeby, Pacific Union Real Estate, (415) 744-4844, alina.aeby@pacunion.com.

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