Buyers, we know it’s hard out there for you right now.

In our current seller’s market, the national inventory of active listings is down 43.1% year over year, according to the Realtor.com June 2021 Housing Market Trends Report. And a scarcer selection means people are paying more, too, with listings up 12.7% in price

All of this demand means buyers are going to ever-greater lengths to make their offer stand out. They’re making sky-high offers and writing heartfelt letters to sellers about why they should get the house. But some buyers in especially tight markets are taking even riskier measures to beat out competitors: They’re removing contingencies.

Contingencies, in the world of real estate, are essentially conditions that must be met to finalize the sale of a home. The provisions of a contingency contract are there to protect buyers and sellers. A contingency offers an escape hatch if problems arise with the home or the homebuying process.

While it’s tempting for buyers to waive contingencies to make an offer more compelling, it can leave them unprotected from unexpected fees, health-threatening situations, and—worst-case scenario—a bad investment. To help you navigate the world of homebuying contingencies, we reached out to real estate experts to find out which ones should never be waived.

1. Home inspection

A home inspection is the foundation on which all other real estate contingencies are built. In the inspection, a neutral expert assesses the home for roofing, plumbing, structural, electrical, and other major problems. Waiving it entirely is the equivalent of agreeing to buy a ticking time bomb, says Annie Kou, a Los Angeles–based brokerage owner and attorney at AK Luxury Properties.

“By the same token, buyers should never waive [their right to] requests for repairs at the outset for the same reason,” Kou says. “Everything may look OK on visual inspection, but you won’t really know how much you’re facing in repairs once inspections are done.”

Instead, buyers should assess what kind of repairs need to be done, and decide if it’s worth it to them to cover the fixes, or if they would prefer to work with the seller on a lower price or price-sharing plan.

2. Mold remediation

If the initial home inspection turns up a potential mold issue, a mold specialist needs to be brought in to analyze the issue. Serious mold issues can cause health issues, some of which can be quite serious—including lung irritation, headaches, and skin rashes—and are exacerbated in people with allergies and compromised immune systems.

“When an initial inspection picks up mold, some buyers and sellers don’t take it seriously, and want to waive it in order to nail down the deal,” says Christina DeSimone, a licensed real estate salesperson at Miranda Real Estate Group in Saratoga Springs, NY. “But mold can be a serious problem that gets worse over time, and it can be incredibly expensive to remediate.”

Bottom line: Waiving an additional mold inspection could be disastrous for your physical and financial health.

3. Well water/septic system inspection

Another contingency that should never be slashed is the well water/septic system inspection.

“Surprisingly, this one often gets overlooked or waived, but I would never encourage a client to do that,” DeSimone says. “This is water that you’ll be drinking and bathing in. We’ve seen the health consequences that bad water has had in communities across the country in recent years. As with mold, this is an issue that can be very expensive to fix—a septic system can cost tens of thousands of dollars—and it has serious ramifications for your health.”

4. Appraisal

An appraisal waiver commits the buyer to pay the agreed-upon price, whether or not the mortgage lender agrees to lend the buyer the balance.

Waiving appraisals is happening more and more because of “how crazy the market is,” says Joseph Skurkis, real estate agent at eXp Realty in Scranton, PA. “But if you waive this contingency, you will potentially be on the hook to pay the difference out of pocket for the home you have under contract.”

Other experts agree.

“An appraisal of the property should never be given up,” says Eric Nerhood, a house flipper and real estate agent with Premier Property Buyers in Seal Beach, CA. “Buying a house at a price above the appraised value will pretty much ensure that the buyer will never recoup their investment.”

5. Financing

The financing contingency is one of the most misunderstood contingencies in the homebuying process, and one of the most important for buyers to negotiate carefully, says Dave Herman, president of EZ Surety Bonds in Oakwood, GA.

“This clause asserts that your offer is dependent on being able to secure financing. If you remove it, you may not get your deposit back if you cannot obtain a loan,” says Herman.

So, if you’re like most buyers and plan on financing your home purchase with a mortgage, you should never remove the financing contingency.

By Kathleen Willcox for Realtor.com


We are ready to help you find the best possible mortgage solution for your situation. Contact Sheila Siegel at Synergy Financial Group today.