15 Jun Real Estate Q&A with Jay Bouragana
Real Estate Questions Answered!
A few weeks ago we asked our community to send in their questions about the real estate market and you all delivered! Thank you for sending all your questions we really appreciate, your engagement and please keep sending them!
Sam from Huntington beach asked,
Q. Why would the sellers ask us to remove the appraisal contingency before our offer is even accepted?
Purchase consistencies are essentially a part of the terms of the sale. When negotiating a purchase, your agent is not only negotiating the purchase price, they are also negotiating the terms of the sale. Terms of sale can be anything from what your down payment is going to be, a timeline of how long you will take you for you to close the escrow, or how long you have to do inspections.
There are multiple terms within the contract and all of them are negotiable. So the seller can negotiate a that you remove a certain contingency, whether it is a loan contingency, an appraisal contingency, inspection contingency, or even check to see if you need to sell a home and buy their home.
This allows the sellers to tell you, “Hey, I don’t want to be contingent on you selling your home. I just want you to buy mine outright.” So, obviously as a buyer, you also have the ability to negotiate their terms so it is a back and forth dance to figure out where can we meet in the middle. Each party’s negotiation position depending on how competitive the environment is around that property.
So if the seller does not have a lot of offers then the buyer will have the upper hand and they can ask for better terms. Or the seller could have lots of offers to choose from and with really good terms. We have seen buyers that can come into a seller’s market very aggressively. Right now, we are seeing a very low inventory with sellers that have beautiful homes priced really well or priced aggressively receive an offer that has no contingencies whatsoever. That can be a cash offer, no appraisal contingency, no loan contingency, no inspection contingency, buying the home with cash. Obviously the seller would love an offer like that because it removes the uncertainty because the buyers providing certainty that they will close that escrow.
This is essentially what that offer is saying to the seller, “I’m certain, I love this house, I want to buy it, I’m going to close on this transaction within two weeks, three weeks, 10 days, and I don’t need anything else from you, just the keys.”
That is a perfect buyer for sellers is also a great buyer for the listing agent. The listing agent doesn’t want to stress out about having to negotiate a different price, a different appraised value, a lot of repairs, the terms of possession, and the timeline of the sale.
There will be times where the seller will ask you, “I have this other offer or I have two offers are very similar. If you could remove the appraisal contingency and give me the certainty that I’m going to get this price, and I’ll accept your offer.” And it is valid from your end as the buyer to not take the seller’s terms and then renegotiate. So that is why it’s really important to work with a strong agent. Who has been well trained in the art of negotiation who will work on your behalf to build a strong rapport to understand the seller’s side is and what their true needs really are. Because a lot of times sellers don’t really know what they want and they may ask for something in order to achieve something else without really having articulated what they really mean.
So good agents will be able to dig a little bit deeper, not only through the listing agent but directly to the seller. Many times listing agent is not very good at negotiation and asking questions from their seller to understand their sellers need and motivations.
A strong buyer’s agent is going to understand that dynamic ask better questions and dig deeper. They will do more investigation and be able to find a way to craft a rebuttal to that counter and design an offer that works for both parties.
Talented and brilliant representative, and a wonderful person.
We are so grateful to have worked with him. And when the time comes to sell or buy a home again, there is no one else we could imagine turning to.