Dear Paula: My wife and I looked to buy a home in the Vail Valley and missed out on a few opportunities due to several offers. When we find a home we really love, we don’t want to miss it anymore. Should we consider removing the opportunity to review or the offer with a valuation spread? And what about the inspection? Can we make our offer more attractive by removing the inspection contingency? – Anxious buyer
Dear anxious buyer: It’s a popular question as buyers look for ways to make their offer as attractive as possible to the seller. Sellers not only look for the highest offer, but also the best deal. Eliminating the unexpected creates a cleaner deal with generally less time and stress. It also tells the seller that the buyer is highly motivated.
For inspections, I always recommend doing one as it protects both the buyer and the seller. It is important that a buyer knows what he is buying in order to make an informed decision. If they are not aware of the faults, especially structural, mechanical, electrical, or plumbing issues, it can lead to problems later. Sellers may feel like they don’t need to disclose just because the buyer may refuse an inspection. However, this does not eliminate the risk and liability of the seller for non-disclosure of material adverse facts.
As for valuations, it really depends on the situation, but buyers should take note of working with an experienced broker who can advise them on the benefits and risks. The buyer is responsible for this cost. Cash buyers may or may not get an appraisal, but if they get a loan, lenders usually need it.
Here are some key factors to consider when waiving an assessment and / or inspection:
Waiver of assessment
- Cash buyers should consider having a valuation even if they waive the contingency. This helps to minimize the risk of not getting a positive return if / when they later sell.
- Buyers who waive the possibility of an appraisal completely withdraw their right to withdraw from the contract on the basis of the appraisal.
- For a funded purchase, most lenders require an appraisal. However, the buyer can always remove the possibility of an appraisal, with the understanding that he will bring money to the closing table if the appraisal is less than the purchase price.
- This is an offer to make up the difference up to a certain amount in the event that an assessment is lower than the asking price. Suppose a buyer offers to buy a house for $ 350,000 with a valuation spread of $ 5,000 and the valuation is $ 345,000. The buyer would pay the difference of $ 5,000. If the appraisal is $ 340,000, the buyer would have the option to terminate based on the appraisal.
Waiver of inspection
- If no inspection is done, the buyer takes the risk of not discovering defects in the property which could be very costly after closing. Buyers are buying the property “as is” and should be aware of what this means.
- If an inspection is carried out and the buyer has waived the possibility of an inspection, he cannot terminate the inspection.
- For sellers, disclosure of material adverse facts, whether or not a buyer obtains an inspection, is always required.
- Similar to a valuation variance, the buyer can terminate the contract if it is expected that inspection defects will cost more to repair / replace than the amount of the proposed variance.
- Offering an inspection gap can be a good tool for buyers, as it is attractive to a seller that a buyer does not dwell on all the details and instead focus on the more expensive repairs that might arise during the process. ‘an inspection.
Above all, don’t buy out of desperation. The market is starting to soften and more and more properties will come onto the market. This is where working with a professional real estate agent can make all the difference – offering objectivity, experience and knowledge to present the best possible deals and negotiate contracts so that the sale / purchase is a win-win for both parties. on the long term. term.
Best wishes in your search.
Paula Fischer has lived in the Vail Valley for over 26 years and has been an award winning Associate Broker for 15 years with locally owned Berkshire Hathaway HomeServices Colorado Properties. Specializing in the resort / luxury market, stretching from East Vail to Gypsum, Paula also brings a unique perspective to buyers looking to build as a co-owner and operator for 30 years of a local construction company with her husband. She can be reached at 970-376-8400 or [email protected].