The pandemic and high unemployment rate haven’t slowed the housing market. With home buyers facing heightened competition this summer for a limited number of homes for sale, some have decided to try to gain an edge by waiving contingencies to make their offers more competitive.
In June, nearly 20% of successful offers submitted by Redfin real estate professionals in select major U.S. markets reportedly waived the inspection contingency, compared to 13.2% during the same month in 2019. Further, 20.6% of winning offers waived the appraisal contingency, up from 17.4% a year ago.
Home buyers are waiving the contingencies to make their offers more attractive to home sellers. The inspection contingency allows the buyer to cancel a purchase or request repairs during the inspection period. The appraisal contingency allows buyers to cancel a deal or renegotiate the price if the appraisal comes back lower than the specified amount. Both an inspection and appraisal contingency are used in offers to protect home buyers in a transaction.