Competitive Offers Increase Risk for Buyers | Trending Contingency & Option Periods Explained

Competitive offers present more risk to buyers. Derek Varnadoe, a Georgia real estate broker and VP of Broker Services at Solid Source Real Estate Companies, discusses four (4) ways buyers strengthen their offers, including reducing (or waiving) traditional contingency and option periods.

Earnest money is a "good faith deposit" that buyers make during the home buying process. These funds are held generally held with the real estate attorney or real estate broker. When a buyer closes, funds can be credited toward the purchase price. When a buyer defaults, funds may be paid to the seller as "liquidated damages". The Georgia Association of Realtors Purchase and Sale Agreement contains a Default section that should be carefully review by all parties prior to forming a binding agreement.

What are the most common terms and contingency periods reduced (or waived) to strengthen the buyer's offer?

1. Shortened Due Diligence Period
2. Increased Earnest Money Amount
3. Shortened Financing Contingency
4. Shorted Appraisal Contingency or (replaced by) Appraisal Gap Clause

Appraisal Gap Clause is a special stipulation available to Solid Source agents within the special stipulations library in FMLS Remine Docs+. This stipulation is not recommended when FHA or VA financing is involved, as it contradicts the lender-required Amendatory Clause (blanket appraisal contingency).

Pre-approval is a must in today's market. Knock GO (Guaranteed Offer) mortgage, for example, pre-approves home buyers upfront and offers appraisal gap coverage. Get pre-approved and WIN the next offer: https://www.knock.com/brokerages/solid-source

Home Inspector Ideas:
Residential Inspector of America
https://www.residentialinspector.com

A.T. Martin Home Inspections
http://www.amartinspect.com

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Copyright © Solid Source Real Estate Companies. All rights reserved. This material has been prepared for informational and educational purposes only, and is not intended to provide, and should not be relied on for, legal advice. You should consult your own legal counsel, or real estate broker if a real estate licensee, before engaging in any transaction.