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The risk you take when you waive inspection and contingencies

On Behalf of | Mar 23, 2022 | Real Estate Law |

The current real estate market in Florida is historic in that competition has never been higher. Some properties sell within days after multiple bids. They may sell for 10% or more over the asking price.

Buyers have had to think of creative ways to make their offers more attractive other than just increasing the purchase price. One common tactic for modern buyers is to waive a property inspection and to not include any contingencies in their offer.

It is certainly true that buyers who don’t put restrictions on their offer and who don’t require that the property meet a certain standard will have an easier time completing a purchase, but the tactics they employ put their financial future at risk.

You could buy a money pit and not realize it

The big issue with waiving the inspection requirements for a piece of real estate is that the property can have significant latent defects that you would never locate without help. Problems ranging from major issues with the wiring to foundation settling could require tens of thousands of dollars in investments to repair.

You may think when you feel like you desperately need to find a home that you are happy to take on those additional expenses. However, the repair costs combined with the highest offer you could possibly finance is a recipe for future financial distress.

You might lose your earnest money

If you have spent years building equity in your current home or setting money aside to become a first-time homeowner, you need to preserve as much of your downpayment and earnest money as possible.

If the transaction doesn’t go to closing, possibly because you can’t sell your current home for the right price or you discover big issues with the property, your earnest money could be vulnerable to claims by the seller. Without a contingency to protect you, that earnest money is at risk if you back out at the closing, even for reasonable concerns like a low appraisal or an inability to finance the purchase.

Understanding the risks involved in some of the more aggressive tactics used by modern buyers could help you avoid costly mistakes when trying to buy a home.