Hello everyone and Welcome to another
episode of Selling Greenville your
favorite real estate podcast here in the
upstate of South Carolina in the
Greenville greater Greenville area I am
your host Stan McCune realtor right here in
the upstate of South Carolina you can
reach me via my contact information in
the show notes at any time I can help
you or your friends with any of your
real estate or their real estate needs
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that today we're going to be talking
about winning the bidding war guess
what what there are bidding wars all
over the place pretty much every
offer I'm submitting right now for my
buyer clients has a bidding war tied
to it I I not all of them but any home
that is like new to the market pretty
much has some sort of multiple offer
type of situation and that's at every
price point up to I've shown up to a
million dollars recently that home
had a bidding war on it there is no
price point that is exempt from bidding
wars right now and we've talked about
that in the past so I'm not going to
get into the Weeds on why that's the
case but I want to talk about not just
looking at the market and saying okay
the Market's crazy sorry but what can
we do about it because I represent a lot
of buyer clients I have more buyer
clients in the pipeline some that are
are moving here from out of state
whatever the case may be and we need
to have Strate IES in place we need to
all be on the same page with how to win
the bidding war because these bidding
wars they're not going away and and I'll
mention this that bidding wars aren't
new okay I bought my first house in 2011
that was like the kind of the bottom of
the housing market in the in the
Greenville area and even at that time
there were bidding wars that were
happening even from 2008 to 2011 we
would still see bidding wars when when
homes came on the market in good
neighborhoods at competitive prices
people were still jumping on them even
though there were other homes that were
that were languishing for 10 11 12
months or more there would still be
bidding wars on on good homes at
competitive prices in in good areas
and so bidding wars are here to stay
like that's never going to change even
during a a buyers Market there are still
bidding wars so we need to to prepare
for them and we need to think about
about how we can win them and I've
talked a little bit about this in other
podcasts this is going to overlap with a
few other podcasts it's going to
overlap with for instance episode 26
when I talked about the kind of the
weird aspects of the South Carolina
Association realtor contract form that
most transactions in Greenville are done
on we're going to have some overlap with
that but I'm going to try not to
over too much that we just kind of
talked about the idiosyncrasies of the
contract this one I'm going to be
talking about how we can manipulate
those idiosyncrasies in order to help
you to win in a bidding war type of
situation in a multiple offer type of
situation and I guess I should
clarify because sometimes there's
realtor speech out there and and I think
probably
75% maybe more of people know what I
mean when I say bidding war or mult
offer situation but I want to clarify
because I had someone like say recently
bidding war is this an auction okay
bidding war that is realtor speak and
it it you know you'll hear this on HGTV
and whatnot as well so it's become more
mainstream but the idea of a bidding war
is basically when a home comes on the
market and a bunch of people put offers
in in at the same time it's not an
auction but it almost plays out like an
auction and often times what ends up
happening is the seller the listing
agent will end up saying okay we are
going to accept highest and best offer
by this time period And so it's not like
an auction like if you go to the the
the Greenville County foreclosure
auction and you're making verbal bids
it's more like a silent auction where
everyone is kind of secretly putting in
their bids and then the seller
decides at the end what they're going to
accept
so that is what we're talking about when
we're talking about a multiple offer
situation or a bidding war now in in
some cases they won't ask for highest
and best and you just need to lead with
your highest and best right away
that's usually what I recommend to my
clients anyway and there are some ways
to to do that that protect you which
we're going to talk about here in a
second but when you're crafting your
offer
obviously the price that you put on
there is a big part of the strength of
your offer but that's not the only thing
there there's really three components to
an offer that is most important to the
seller and you could maybe add a fourth
in there but the main three
components are price earnest money and
contingencies now the fourth component
that you could add in there is the
closing date that is kind of it
that's kind of far beneath all the other
ones and so I'm just going to kind of
gloss right over that but if you have
have a
competitive a a quick closing date
for a seller for instance let's say it's
a it's a nonoccupied home it's a vacant
home and you can close on that home in
two to three weeks and and there by the
way if you're getting financing you can
still it's it's a little stressful but
you can close within 3 weeks if you have
a good lender and I can recommend good
lenders if it's a cash deal I mean
you can close in I I'd probably say
10 days I mean technically you could
probably get an attorney to do it
quicker than that but if you're buying
cash you can close in as quickly as 10
days so that is something that can be
helpful now for people that are living
in the home they might not want it to be
that quick that's something I usually
discuss with the listing agent is hey
we're flexibil if we have flexibility on
the closing date I'll say hey we're
flexible when it comes to that closing
date what would your clients most want
and what I hear most of the time is that
they're like hey you know 4 weeks 30
days you know that's that's fine and
that's kind of our standard contract
period here in Greenville is roughly 30
to to 45 days once it gets to 45 days it
starts to feel really long so so I
want to try to keep that
to ideally no more than 30 to keep the
offer looking attractive but again that
one is far beneath all the others
really you you just don't want that to
be too long you don't want your closing
date to be way out there then it makes
your offer look look weird and
unattractive because it's like well why
would I wait 60 days so as long as
you're keeping that within 30 to 40 days
your your period that you're under
contract until the closing date that
most of the time will be kind of a
non-issue but these other things the
price the earnest money the
contingencies all of those things
together come combined make up a
strong offer or a weak offer depending
on what direction you go with it so let
let's talk about price price is is
obviously the most straightforward out
of all of
them but it it isn't necessarily
straightforward right so let's say that
you have a house that's listed for
$300,000 and it gets multiple offers on
it right now in this market we're
frequently seeing offers going 10 15%
above what a house is listed for
so you might not feel comfortable
leading with well I'm I'm just going to
offer 330,000 maybe you're willing to go
up to $330,000 but you're not willing
you don't really want to just start with
that offer you do have option another
option which we've talked about in the
past is to do an escalation Clause the
way an escalation Clause would work is
you would say I'm offering this amount
let's just say 305 I'm offering a
little bit more than than what it's
listed for but I'm willing to go up to
300,000
$330,000 and basically do a 100 thou
man I'm struggling here $1,000 more than
the next competing highest net offer up
to
$330,000 and the the seller then has to
bring proof of the next competing
highest net offer so let's say that that
offer is 325,000 then B basically the
the listing agent would have to provide
that to me and then we would say okay
you're willing to you said that you
would go $11,000 more than the next
competing offer the next competing
offer is 325 that doesn't exceed your
maximof 330 so now you're at 326 so
then we would just redo the paperwork to
say that now you're under contract for
326 now I I've had this question I
don't know how many times when I've
discussed the escalation Clause way of
doing things well how do we know that
the listing agent isn't just making up
an offer isn't just providing you a
fake offer from someone else well we
don't the the short answer is we don't
there are some aspects to the offer
that I can look at that can kind
of make me have confidence or not
confidence in it
as I'm reviewing it but that being said
at the end of the day the listing
agent could be sneaky and crafty and
fabricate an offer but but think about
it this way right the listing agent is
probably making roughly 3% of the
contract
price let's say that I figure out that
the listing agent
fabricated an an offer in order to drive
the price up from 3 you know from 305 to
326 that's a
$21,000 difference and what is 3% of I'm
just doing this on my computer real
quick here 3% of $21,000 is $630 so
that's and that's before any commission
splits that agent has with his or her
brokerage so that agent is trying to
get another
$630 maximokay $630 so it's not much
the listing agent isn't getting a whole
lot more by doing this crafty scheme of
trying to drive up the price but what
the listing agent is doing if they get
caught okay if they made up an offer in
order to drive the price up on the
escalation clause and they got caught
they would lose their license they would
potentially have lawsuits they they
would be risking
their time in Freedom not out of jail
they would be risking their career etc
etc and that is not worth it for the
majority of Realtors out there okay so
I am in full confidence and obviously
I'll still review when they send that
paperwork over and say well here is the
next competing next net offer the
highest competing net offer I'll still
review that and see if there's anything
fishy about it but I've never seen
anything fishy in in these situations
before and and again it would be
unbelievable in my mind it would be
shocking if a realtor was willing to
risk their career and their livelihood
in order to make an extra few hundred
most of them are not going to do that
the vast majority of them are not going
to do that all right so we got all that
in the past the escalation Clause is an
option for saying okay I'm willing to go
up to this amount but that's not where
where I'm going to lead with okay now
it's worth mentioning that not all
agents like the escalation clause and it
does muddy the water a little bit let's
say that you get
multiple offers that have escalation
Clauses by the way these were really
rare up until the past calendar year and
now they're becoming exceedingly common
we're seeing them more and more
often so if you get multiple
offers with escalation causes it gets it
gets really tricky for the seller and
and it it might I'm not even going to
get into the Weeds on that but it might
be a situation where it's like well
which offer trumps the other and so
some listing agents in the past have
said I'm not even going to look at these
which is honestly illegal they have to
present any offer according to the
the code that Realtors have agreed to
they legally have to present any offers
to their seller clients that come AC
Ross their table but obviously some of
them don't like it for whatever reason I
I don't know why I think it perhaps
because they're lazy and they don't want
to do the extra work but some sellers
don't like it as well because it it is
extra work extra calculation etc etc so
that's something to keep in mind I
usually advise my clients hey if we're
talking about a big difference if we're
talking about tens of thousands of
dollars that you're willing to go
over list price and and we're not sure
you know what the other offers are maybe
maybe we know that there's like two
other offers and and we're not sure if
those other two offers went tens of
thousands of dollars above the list
price then an escalation cause is a good
option if there's like 10 offers on the
property it's probably best to avoid the
escalation clause and just lead with
your best foot forward whatever that
number is whatever your top number is
whatever whatever you really want that
property for to to lead with that so
there's a lot of different things to
consider there and of course if you
guys have any questions let me know
for a lot of you that are listening to
this I'm sure you've already been
through this with me if you're a
current or past buyer client of mine all
right so that's the price earnest
money and contingencies all right let's
talk about this earnest money of
course is the money that you put forward
with your ratified contract that's held
by the closing attorney and that goes
towards your purch price at the end
to you know towards your down payment or
towards your closing cost whatever
the case may be our standard earnest
money deposit in in this area at
least is basically 1% of the purchase
price so on a $300,000 home that
would be
$3,000 now the earnest money is
basically your good faith you're
you're you as a buyer saying hey I have
money that I'm willing to to have a
third party hold to show that I have
skin in the game that I'm invested in
purchasing this property but you can
get that earnest money back based on the
contingencies so so your earnest money
and the contingencies are kind of tied
at the hip they're connected at the hip
here one way that you can improve
your offer make your offer more
attractive is by offering higher more
earnest money higher than 1% % maybe 2%
or maybe somewhere in between the two
that is obviously going to be
eye-catching to the seller most of the
offers are going to have closer to to 1%
so if you lead with double that it's
going to be like oh okay they have more
skin in the game but if you have a
gazillion ways where you can get out of
the contract and get that earnest money
back it doesn't really matter you
know judges in our area if if you ever
have a an earnest dispute judges I've
heard frequently side with Buyers
also you know it's disadvantageous to
a seller to hold up the sale of their
home to dispute over earnest money so at
the end of the day buyers already have a
lot of things working in their favor
to get their earnest money back so
tightening up the contingencies is an
important part of making that earnest
money actually mean something and of
course your contingencies are the things
that allow you to get that earnest money
back potentially so there's a financing
contingency an appraisal contingency
again I'm I'm talking about form 310
South Carolina Association Realtors
form 310 this is our standard contract
form it has a financing contingency and
an appraisal contingency two separate
ones it has an inspection
contingency that's not really what it's
called but but roughly speaking it has
that
and then a cl00
contingency there are a few other
things in there as well that that you
could technically count as contingencies
but those those are the big ones all
right so let's talk about the financing
contingency how do we make a
financing contingency more attractive
well the most attractive way is to not
have one but that's only if you are a
cash buyer obviously if you are
financing the home in any way way you
have to have that you have to have that
now I did run into a situation recently
where it was like we had someone that
was buying a home
cash and the cash was going to come from
the proceeds of their home that they
were
selling and that home hadn't sold yet
and to make the offer as attractive as
possible we we didn't have a financing
contingency because they were buying it
cash but we also didn't have proof of
funds because it was based on the home
sale
contingency and so we we also in
order to make the offer really
attractive we also didn't put a home
sale contingency in there as well and
what that meant is that if the offer
fell through for basically for any
reason like let's say that the let's
say that the home that my client was
selling did not sell and then they
didn't have the cash to buy this next
home they would be forfeiting their
earnest money and they put forward quite
a bit of earnest money so that's kind
of a backwards way of doing it which by
the way the agent had no idea I had to
explain to her so many times what we
were doing and she had no idea so some
of these things sometimes simple
simpler is better and sometimes you
have there is a little bit of back and
forth with the agent to make sure the
agent understands how you're
structuring these deals creatively in
order to to win these bidding war
types of situations so I have to feel
this out quite a bit when I'm when
I'm negotiating with the
agents but obviously cash is King if
if you can make a cash offer and very
few contingencies that is going to be
a very good offer by the way if you're
doing an escalation Clause you can and
and it's a cash offer one thing that you
can do because cash is so much cleaner
is say hey this escalation Clause only
pertains to other cash offers now the
seller may decide that they want to
accept a higher financed offer I've seen
that happen before where they're just
like you know what price is more
important to me I'm willing to I'm
willing to go ahead and you know
accept the financed offer with an
appraisal contingency etc etc because I
just want more money so so that does
happen but often times a lot of sellers
like the security of cash versus a
financed offer now most people don't
have cash so they have to finance it so
what then can you do well understand
that a higher down payment looks better
and in the offer and contract itself it
says how much down payment you're you're
putting forward we really need to make
it to where it's kind of like the lowest
down payment you plan to make so maybe
you plan to do 10% but you might have to
do 5% for a variety of reasons then then
we need to put that it's going to be a
5% down payment because otherwise if you
change things the seller has to sign off
on that we don't want the seller to have
to to sign off on that that's my opinion
there's different ways of approaching
that but I think that that's the best
way of doing that in my opinion
additionally if you have a better
loan that you're doing that looks better
as well so a conventional loan is
going to look better than you know an
FHA loan for instance or a USD loan
or a VA loan and and some people
prefer for whatever reason there's
some people that don't like VA loans VA
loans are in my opinion a great program
some agents don't like them they've
had bad experiences with them and so
that that's a consideration as well
so the financing contingency you can
make it stronger based on what loan
you're getting based on what your down
payment is often times people are a
little bit constricted they don't really
have choice es of the matter they're
either like hey I can only do FHA and I
can only do 3 and a half% down well
then it is what it is we just have to we
just have to live with that but if you
have flexibility if you can put more
down if you can opt for a stronger
Loan program then that's even
better what about the appraisal
contingency even though the appraisal
and and the financing are also tied to
the hip
they are two separate contingencies and
that's because your financing could fall
through for a variety of reasons
let's say that person loses their job
and it's not due to any fault of their
own they get laid off now they can't get
financing now they can back out of the
contract on the basis of their financing
contingency and get their earnest money
back but let's say that they can get
financing that doomsday scenario doesn't
happen but the appraisal comes in low
and you have an appraisal contingency
now the the buyer has options the buyer
can back out on the basis of the low
appraisal the buyer can renegotiate with
the seller in order to try to get the
purchase price down or the buyer can
just bring more money to the closing
table in order to to bridge the gap
between the apprais price and the
contract price what's happening now
is a lot of in these bidding war
situations we're seeing a lot of
creative things happening when it comes
to the appraisal contingency some people
people are waving appraisal
contingencies Al together and then some
people are are also doing these things
where it's like well we can't risk
ourselves to entirely waving the
appraisal contingency but we're willing
to say if the appraisal comes in $10,000
low or $20,000 low will bring that money
to the closing table so so how would
that work that would work let's say that
you've got a you're purchasing a home
for $300,000 that's that's what the
contract price is and and you're you're
bringing 5% down all right let's just
say that that's
$155,000 that you're bringing down let's
say that the home appraises for
$290,000 so $10,000 below what you're
under contract for that buyer in order
to bridge that Gap would have to bring
the $110,000 shortfall so they'd have to
bring $10,000 to closing and then in
addition to that 5% of 290,000 which is
14,500 so then that comes out to 20
$4,500 so you're you're before you were
planning to bring $155,000 down now
you're having to bring
$24,500 down in order to make it work
and then you also have closing costs on
top of that of course don't forget so
there are some ways to make the
appraisal
contingency more attractive to sellers
obviously an offer that doesn't have
that contingency is a really strong
offer because guess what as prices keep
going up and up and up sometimes it can
be hard for appraisers to justify it and
so we do see some low appraisals I
haven't seen any recently thank goodness
I have not seen any low appraisals
recently but I've seen plenty of them in
my career and I'm sure at some point
this year I will see a low appraisal
it's bound to happen but again if
you're in a position where you can wave
it then that makes your offer so much
stronger because then that's one less
thing the seller has to worry about the
seller is like oh man I don't see how
this home is worth more than 315 but I'm
getting offers at 330 340 well if they
get an offer for 330 without an
appraisal contingency and an offer at
340 with an appraisal contingency they
should probably accept the offer at 330
without if I were the listing agent and
I'm like hey I can't justify this price
I'm looking at the comps it doesn't make
sense I'm afraid an appraiser is
going to struggle with this take the
lower offer the lower offer is going to
offer more security it's a it's a burden
in hand type of thing rather than
rolling the dice and then running into
and running into trouble
later the issue with waving the
appraisal contingency of course is that
if it comes in low and you don't have
enough money to make that up now you're
now you're in trouble you know you
can plead with the seller hey please
come down on the price but the seller
doesn't have to and they're probably not
going to probably just going to go back
to one of the other offers that they had
and say hey are you still in the market
this one is coming back up for sale
and then at that point because you waved
that contingency now you're giving up
your earnest money you're forfeiting
your earnest money because the appraisal
came in low and so I usually only
recommend waving it in two instances one
is when you as a buyer you have more
than adequate cash to make up what
whatever difference we anticipate that
there might be between the appraisal and
the contract price and that's something
that I look at I look at the comps and I
analyze all of that and I kind of come
up with you know a worst case scenario
of like okay here's here's in the worst
case what I what I think will happen
as far as the appraisal coming in low if
you if you as a buyer have plenty of
cash to make that up no big deal no big
deal we can wave the appraisal
contingency if you're comfortable with
that the other one is just and and
this is a little bit more rare but we
have this happen sometimes if if the
buyer doesn't have as much money maybe
it has just a little bit of money to
make up a small shortfall in the
appraisal but we're just very confident
that it's going to appraise at or very
close to the contract price Mo
understand most appraisers they don't
want to get the blowback of an appraisal
coming coming in low they don't they
don't want that they know they're
going to get called immediately probably
by both agents they know that that
people are going to be angry that
they're going to be asking for revisions
that all sorts of things are going to
come into play so a lot of appraisers
they're really incentivized to to make
their appraisal at the contract price
and so if we have the data to justify it
if we have good comps that are like okay
yes this almost certainly will appraise
at the contract price and if it doesn't
it should be very close to it and you
have enough money to make it up if it's
close to it there you go that's a good
opportunity to wave it otherwise your
best bet is either to keep the appraisal
contingency which is just going to make
your offer lower or say hey we're
willing to bridge the gap between the
contract price and a low appraisal price
up to $10,000 or up to $115,000 again if
you have that money in addition to your
down payment and closing costs
that just protects you if the
appraisal comes in $20,000 to low then
you have the the option at that point
that you can back out and get your
earnest money back at that point or or
perhaps to renegotiate with the
seller maybe the seller is willing to
split the difference or something like
that I I will say one thing if you're
like hey we only have we we can't do
much but we have like an extra $5,000
at play here to make up you know for a
low appraisal should we write that in I
I would say not because that just sounds
weak that sounds like you're you don't
have a whole lot of money you're cash
poor I'm not saying that you're cash for
it just sounds like it now you're
putting you know the ideas and the
seller's mind potentially they're
looking at this offer and they're like
what they can only make up a $55,000
difference between the contract and the
appraisal price that doesn't sound like
and and they're only putting 3 and a
half% down that doesn't sound like they
have a whole lot of money I I'm not
so sure about that I would prefer it
to be at least
$10,000 that you have that you can put
towards bridging that appraisal
shortfall Gap in order to write that
in I feel like that at that point you
start to look more serious as a buyer
and that inspires more confidence to the
sell
so that's the appraisal contingency all
right let's go on to inspections there's
not really an inspection contingency in
in form 310 but this is what we
spent that episode I think I said 26
where we talked about the Greenville
contract or this technically it's the
scr South Carolina Realtor Association
contract it has a section Section 8
where you have three check boxes as is
repair procedure or doe deal diligence
and I did not say those in the order
that they appear on the on the contract
form but those are the three options
as is repair procedure due diligence
obviously the strongest out of all of
them is the Asis one but that's there's
an important distinction to be made
about when you're purchasing a property
as is okay the way it's written in that
contract form is that as is if you check
that box what you're saying is that you
cannot get your earnest money back on
the on based on the condition of the
property for any reason for any reason
based on the condition of the property
you can inspect but if you find
something major and you decide at
that point hey I want to back out
because I found something crazy in here
you know major structural issues
you're in trouble you're in trouble
you're you're at that point
technically the the seller can take your
earnest money in order for you to back
out and so that's something that's
an
extreme maneuver now that obviously
makes your offer really strong if you're
saying hey I'm I'm buying this as is I
am I don't care what the condition of
the property is I'm confident in it I'm
willing to purchase it as is yeah
that that makes your offer super strong
and that's an offer that most sellers
are going to be really excited about
although I had one recently where we did
it as is and it wasn't accepted
because apparently they just got some
crazy other offers out there but I
only recommend going that route because
that that's really risky and I I don't
like Risk I really don't I only
recommend going the Asis route if if you
are really confident the home is in very
good condition maybe it's a newer home
maybe you can just tell it's been kept
up with really well it's in real good
condition or you're a buyer that has
a a lot of money in the bank that you
can put towards repairs and you just
really love the house and and you're
willing to to take the risk it's an
acceptable level of risk and that's what
we're that's what we're evaluating here
how much risk is there going the Asis
route again with a newer home
there's not as much risk with a home
that has has been kept in very good
condition there's not as much
risk in order to try to to get a full
idea of what the situation is with a
home I always recommend to my clients
and and I do this when when I'm showing
the houses let's look at the roof let's
see what condition is that roof in let's
look at the AC units let's try to to try
to figure out how old they are a lot of
sellers they'll put ages of the AC
conditions on their sell disclosure that
are flat out wrong so you you need to
look at that yourself look in the crawl
space if there is one how does the crawl
space look there's all sorts of
different things to look at that will
help you to understand the major
systems of the home not just the
interior condition but also all these
other things and then if you look at all
those other things and you're still
confident you know the the roof looks
new and in good shape the AC's are newer
condition etc etc now that can give
you confidence with being a little bit
more aggressive maybe even as aggressive
as going as is in terms of your offer
however there are the two other options
which are the repair procedure option
and the due diligence
option due diligence is the simplest one
and again I discussed this way back in
that earlier episode so I'm not going to
get too far in the weeds but due
diligence means you can back out for any
reason well that's not an option that a
lot of sellers want to see they don't
want to give buyers that much Liberty
but the repair procedure option is kind
of clunky because that forces sellers to
do
repairs and and that's just the way
that whole thing is structured is that
you're doing inspections you're asking
for repairs and then the seller has to
do those repairs so let's say you have a
situation where a seller is wanting to
sell a house as is but you as the buyer
are not willing to to make an offer
with no ability to back out on the basis
of the condition of the property you
really only have one option and that is
to go the due diligence route and you
can modify it and and initial you know
make modifications and initial the
language to say that you're you're not
going to ask for repairs you're going to
purchase it as is I ran into this
recently where that was a possibility I
went to the listing agent to ask hey
what would your client prefer would your
client prefer the due diligence route or
would your client prefer to make repairs
and for us to go the repair procedure
out and he was like yeah they they would
just prefer to to do the repair
procedure rather than giving buyers all
that Liberty to back out okay done deal
none of these options are great I
feel like that's one of the biggest
shortfalls of of the contract form that
we use even though they modified it
extensively recently but it is
what it is this is what we have to deal
with and so again this is all based
on what the buyer is comfortable with
what the seller is comfortable with and
trying to find the best fit for all the
parties last but not least there is
and this is even though you would think
this is a part of the
inspection contingency area it's not
which is a CL 100 contingency and that
is what you might have heard in other
areas referred to as a termite letter or
wood destroying organisms letter
whatever you want to call it we call it
the cl1
100 and it's when they look at
especially if it's across space house
where an inspector specifically a pest
inspector for instance Terminix would
be an example that might come to mind
goes in the crawl space or the
basement or whatever the foundation of
home is and looks for termites
potential current infestation past
infestations damage mold fungus
powderpost beetles anything that would
destroy that would be a wood
destroying organism down there now
this is a separate
contingency from the inspections one as
I've already said and so this becomes
kind kind of
interesting I think it's a separate
contingency because we have a lot of
moisture and a lot of termites down
here so it's like they broke it out into
its own thing but let's say for
instance that you make the offer as
is but you still want to to check for
termites and moisture that's still an an
important detail to you which I can
fully understand if it would be you do
do have that option and then even though
you can't back out on the basis of the
condition of the home if there is an
active infestation of termites or
standing water or something that causes
or or molds something that causes the CL
100 to fail now at that point you as
the buyer can back out you know if
the seller won't remedy those things
and and so that is an option if you go
the due diligence route
which again that gives you the ability
to back out for any reason really you
don't need to have the cl00 contingency
at all because you can just do that
during your due diligence period by the
way some lenders require the CL 100 so
actually I had an offer recently on a
listing that was as is but had the CL
100 contingency in there because the
lender required that so that's just
something to keep in mind as well
different lenders have different
requirements when it comes to
that but yeah if you're going to the
due diligence route there's really no
point in even having that contingency
just knock it out during your due
diligence period as long as it's done
within 30 days prior to closing because
that's what most lenders want some are a
little bit more flexible on that but a
lot of them want it to be done no
later than 30 days prior to
closing if you're doing a repair
procedure you might as well just go
ahead and and include that co100
contingency in there anyway because
you're already inspecting for other
things you might as well inspect for
termites and moisture which are probably
going to be a bigger deal than anything
that's revealed inside the home so
yeah absolutely so there aren't very
many instances in which I think you
should wave the the cl00 again if
it's you got to look at the at the risk
right let's say that this is a home
that's just a couple of years old and
it's on a slab foundation and all of
that you probably don't have you
probably have a a very low likelihood of
there being termites or moisture issues
so at that point it it might be an
acceptable risk for a homeless on a
crawl space or has a big basement or
whatever I'm very leery of waving
the co100 contingency again if you if
you have enough money that it's like you
know what I just want to get this house
and I'm willing to give up that earnest
money that that's kind of overshadows
all of this if you're willing to
surrender your earnest money if you if
you have enough money in the bank that's
like you know what that $3,000 or $5,000
whatever I feel like this is an
acceptable risk and if I lose that money
that hurts I don't like that but it's
okay it's okay if I lose that we'll just
keep moving then that gives you the
most amount of flexibility then you can
wave as many of these as as as many of
these contingencies as you want because
you're willing to to Forfeit that
earnest money again I don't want that
to happen so I always discuss that with
my buyer clients as much as possible but
let's say that you're in a
situation where you're just really
having a hard time finding a home and
you find the perfect home you might and
and there's multiple offers of course
because there always is on the perfect
home you might need to go in you
know strong with your offer and if you
have the ability to to take that
risk and to take any of these risks you
you need to consider that that needs to
be something that you keep in mind and
so that's something that I talk through
with all my buyer clients and make sure
that they understand okay here is the
risk here is what could happen in this
situation here's what I'm concerned
about here's what I'm not concerned
about and we had that discussion and
through that process we try to craft the
best possible offer that gives you the
best chance at winning in the bidding
war without you losing sleep at night
and that's that's my
metric I'll I'll talk to my clients a
lot about this I'll say what would cause
you to lose sleep would you lose more
sleep if you submitted this offer th
with you know with this higher price and
none of these contingencies are you
going to say oh man I'm I'm really
putting myself out there or would you
lose sleep if you lost out on the home
because because you didn't do that
that gut feeling at the end of the day
is really really important because even
if it's irrational it's there and you
don't want to buy a house and you
don't want to go through a process where
that is just lingering where you just
have a nasty feeling the entire time
but also you don't want to to not go in
Strong Enough lose out on the house that
you really love and then that then
lingers for the rest of time where it's
like every house that comes on the
market you're like you know what I don't
like this one as much I like the other
one I wish I had gotten the other one
and so you need to to take all of that
into
consideration okay I think that you guys
are now experts on all of these
contingencies how to win the bidding war
hopefully I am the one helping you
win these bidding wars and all of my
contact information is in the show notes
if you want to reach out to me for any
reason I love hearing from you guys and
also as always please make sure you
subscribe that you don't miss any future
episodes leave a rating and a review if
you haven't done that until next time
happy bidding
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