The married couple began seriously searching for a property to buy in Austin, Texas, after November’s presidential election.
They quickly realized that, at a minimum, they would need to include an appraisal waiver in whatever offer they made.
A reasonably-priced home could fetch 20 or more offers, said Resnick, who works as a senior product manager in the tech industry.
The couple understood the rationale behind buyers waiving the appraisal contingency — after all, sellers wouldn’t want to deal with buyers who might back out if the appraisal came in low, especially given how high bids could come in above the asking price.
With so many buyers in the market — and so few homes to go around — families are often facing pressure to waive certain contingencies in order to make their bids stand out.
agents faced competition in March, according to a recent report from the real-estate brokerage.
The most effective strategy, according to a Redfin analysis of thousands of offers made between July 2020 and February 2021, is to come in with all cash.
Other research backs up Redfin’s data.
Some buyers who need a mortgage may also opt to waive this contingency, but that comes with risk should lenders not come through with a loan.
Increasingly, successful offers are featuring some sort of contingency waiver.
Between September 2020 and February 2021, nearly 18% of successful offers waived the appraisal contingency, up from roughly 6% the previous year, according to Redfin.
Similarly, Redfin reported that more than 13% of successful offers feature a waiver of the home inspection contingency, up from roughly 7% in the previous year.
“It gives the buyer the opportunity to back out of the purchase if they can’t sell their current home within a certain time,” said Holden Lewis, home and mortgage expert at personal-finance website NerdWallet.
“Homes are selling right away for significant amounts of money over asking — in some cases 10% to 15% higher,” Gassett said.
They could also try to negotiate with the seller on the home’s price — though in today’s seller’s market, that may be a fool’s errand.
Making a smaller down payment could lead to a higher interest rate and the need to pay mortgage insurance, which could cost thousands of dollars.
In a worst-case scenario — if the buyer couldn’t afford to make up the difference — the buyer may be forced to abandon the deal.
“We’ve also seen some buyers offering to pay a portion of the seller’s closing costs and taxes or releasing the earnest money deposit early,” she added.
If a home buyer expects they’ll need to waive the home-inspection contingency, they may be able to conduct a pre-inspection of the home before submitting an offer.
The local company uses appraisers who are very familiar with the Austin market, she said, increasing the odds that the value would be in line with the price the couple offered.