- The Washington Times - Friday, February 23, 2001

During a sellers' market, many buyers believe all they can do to compete is bid higher than their competitors, remove all contingencies and just write a large check to the seller for an earnest deposit.

Not true.

Buyers still have a few strategies and rights, during a sellers' market, they shouldn't forget. For instance, during a hot market the first contingency to be sliced away is the home inspection. With plenty of buyers beating down the doors to purchase a house, conventional wisdom dictates buyers shouldn't reduce their chances of winning the house by throwing in a home inspection. While this may be a good negotiation strategy, it is not a good home-buying one.

Buyers can still request a home inspection without it being a contingency. Even though a buyer may be willing to move into the house as is, that doesn't mean he shouldn't know what problems and defects will greet him at the door. A noncontingent home inspection can help alleviate anxiety for the buyer who wants to know what other expenses there will be once settlement occurs.

A contingency that plays well in the buyer's hands and one that cannot be waived is the homeowner "docs" contingency. Most jurisdictions require a period of a few days for buyers to review the governance documents of a homeowners association.

Buyers should read over these documents carefully to determine if they want to live in the dwelling under the homeowners association restrictions. If the buyer finds concerns in the homeowners association docs, this is reason enough to pull out of the contract.If you're a buyer who needs financial assistance from the seller to get into a house, one strategy is to go ahead and request the assistance, but make sure the rest of your contract is rock solid.

For instance, get pre-approved (the next step after pre-qualified) to ensure no financial contingencies, offer enough over the asking price to help the seller give back what you need in the transaction, and apply for a mortgage program that allows the seller to give you a lot of assistance (upwards to 6 percent with some programs).

Just because a buyer needs financial aid from the seller to make the deal work, it doesn't mean the buyer is out of luck. If prices are appreciating at a good clip, you can take the chance of moving the price upward to give the seller the funds to help you out.

For example, if you need 6 percent assistance on a $200,000 loan ($12,000), then offer that much more in the asking price, requesting the difference back from the seller in the form of closing costs, points on the loan, etc.

Where you might run into trouble is if the house doesn't appraise for the contract price. If you offer $212,000 for the above-mentioned property, but the lender's appraisal comes in at $207,000, somebody has to move up or down.

The buyer must come up with another $5,000 or the seller must bring down the price. This is a good time to have an experienced Realtor with excellent negotiating skills on your side. When facing a sellers' market, keep in mind there are other ways to come out the winner than just outbidding your competitors.

M. Anthony Carr has covered the real estate industry for more than 12 years. He can be reached by e-mail ([email protected]).

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide