Buying a Home? Make Sure Not to Waive These Contingencies

Thanks to low inventory and high demand, competition for property has never been more fierce. And in response to the ultra-competitive market, some buyers are waiving their contingencies to make their offers more attractive to sellers.

But no matter how hot the market is, there are certain contingencies you should never waive. A recent article from realtor.com outlined the contingencies buyers should never waive during the home buying process (even in a seller’s market!), including:

• Home inspection. The home inspection gives you key insights into the condition of the home and any necessary repairs or improvements that need to be made. The home inspection will also alert you to any red flags that the house isn’t what it appears (for example, issues with the foundation)—which is why you should never waive it.

• Mold remediation. Mold can cause a host of health issues—and if your home inspection reveals that there’s a mold problem, you may want to ask the sellers to take care of it before you move in. Otherwise, you could find yourself dealing with the stress and expense of getting mold removed down the line—or, even worse, managing adverse health effects as a result of the mold issue.

• Appraisal. If you have a mortgage, you should never waive the appraisal. Otherwise, if the home appraises for less than the purchase price you agreed to, your bank may only cover the amount the home is appraised at—and you could find yourself on the hook for the difference.

The Takeaway:

Bottom line? Waiving contingencies might make your offer more attractive to buyers, but it could translate to a disastrous home purchase—so make sure to keep your key contingencies in place.

Ready to start your home journey?

www.HomeSnap.com/laura-key

Appraised Value: The Ups & Downs Of How Much A House Is Worth

How is the fair market value of a real estate property actually determined?

Determining Fair Market Value is an eternal struggle and major balancing act. That’s because buyers want a house to appraise on the low side—to keep the purchase price down. While sellers want the same house to appraise on the high side—to make the sale price higher. And then you’ve got the owners of the house—who also want the appraisal to be on the low side, in order to keep the property taxes down.

So with all these different agendas and points of view, how is the fair market value of a real estate property actually determined?

Once a year, your county sends all area homeowners official notices that put a dollar value on their property. And property taxes are based on those dollar values. But before those notices get sent out, a long, detailed process usually takes place. First, the land is valued as if it’s vacant—an empty lot, in other words. Then any improvements are described and measured. Improvements consist of the house and any other structures, pools, sheds, garages, and so forth. Next, most counties check the Marshall Valuation Service Cost Guide. It’s a standardized nationwide guide for determining the value of the cost per square foot to build a building that fits the description of the improved property. Next, if the house isn’t brand new, the replacement cost is considered, as well as depreciation; the year the house was constructed and the condition of the property are factors here. Appraisers then must take the critical step of comparing the value of the house with recent selling prices of similar homes in the neighborhood. At this point, the appraisal might stand “as is”—or it might be adjusted upward or downward.

Market Value is a theory, in other words—not an unchanging fact.

In a perfect world, you have to have willing buyer and a willing seller. Neither is under duress. Both are in a position to maximize gain and are trying to do this. But in the real world, things are rarely that simple and equally balanced. Which is why people feel differently about the appraisal value of a house. It really depends how strong their position is as a buyer or seller.

Does the local economy come into it at all? You bet it does.

Ask a successful Realtor about that! He or she will tell you they’ve noticed that the Rio Grande Valley’s fast-growing economy is attracting people from other areas who consider real estate here a bargain. That helps fuel increases in property values.

So—now you know where that Grand Total comes from.

You’re armed with the information you need to make a better house-buying decision. For instance, you can understand how two virtually identical houses that are in two different neighborhoods could be very far apart in price and appraised value. And why your choice of the right house in the right neighborhood could be worth a not-so-small fortune to you right now—and years down the road.

 Sellers! You can get a great idea of how  much  your home is worth! Call me for a FREE Comparative Market Analysis (CMA) Laura Key 310.866.8422