Recent buyers - contigencies
 

Hi all,

A question for recent home buyers (resales for the most part):

One can normally have a contigency on the purchase based on a passing grade from a home inspection.

Has anyone researched (or actually done) a contingent clause on the purchase based on obtaining home insurance?

Thanks!

I thought that was normal practice, however you may need to work out the details, like can you back out whole, or will you lose some of your deposit, etc.

A buyer can include any contingency he/she wants before agreeing to purchase a home. The seller does not have to accept these contingencies. He /she can negotiate or refuse the offer and wait for another buyer. If the seller accepts the contingencies, he/she must follow through. In this case, if the buyer cannot secure insurance the sale is no longer valid. Both parties move on. The seller must find another buyer.

You can put whatever contingencies you want, into an offer for a home. You can make an offer that's contingent on the sun coming out on closing day. It's up to the Seller to agree or not to agree.

Keep in mind, you'll probably get pushback from your real estate agent. Brokers around TV are the most unsophisticated and amateurish brokers I've ever seen ... they're very easily confused and they're favorite saying seems to be; "that's not how we do it here".

One contingency that is usually accepted (at least up here in MA) is a mortgage contingency. The buyer will have a pre-approval at the time of accepted offer. But there is a contingency that the mortgage has to be fully approved (clear to close). Sometimes crap happens and the mortgage falls through.

My guess is that if you can't get an insurance binder then the mortgage won't be approved so you sort of have that contingency built in. Of course, if this is a cash deal that isn't applicable.

I think you can always get insurance. The question is the price and the policy limits. The clause should put state a price and the coverage on the insurance to be meaningful.

Same with a mortgage contingency. People with great credit may get a mortgage at 6% but people with horrible credit can probably get a mortgage at 10%.

I doubt if you can get both sides to agree to that language.

You get pushback from real estate agents because they work for the seller. Typically, the buyer doesn't have an agent who represents them. Some brokers in The Villages may be unsophisticated, but, in my opinion, many buyers are even more unsophisicated. Some buyers don't even realize that the agent showing them houses does not represent them. Also, they are willing to sign any selfserving boilerplate contract that they are asked to sign without any pushback or negotiation. Buyers need to understand that they are paying for the house, and therefore, they have all of the leverage. And yes, the buyer can demand that the house they are buying can be insured, mortgage or not.

what contingencies a seller will accept typically depends upon how "hot" the market is. I have a wealthy (very wealthy) relative who wanted to buy a desirable home in San Francisco during the most recent super-hot real estate period. The "asking" price was north of $6 million. He knew if he wanted it he'd have to move fast, and make a "no contingency" offer. When he first walked through the place he had with with him a slew of building inspectors for all of the various parts of a building you'd want to know about. Roof, electric, plumbing etc etc. They spent most of the day there. He made an offer, above asking price, no contingencies. He got the property.

That is an extreme case. I sold a property in a depressed, small town in upstate NY. In order to get it sold I had to accept all manner of "reasonable" contingencies. It had to pass inspections, and it was even contingent upon the sale of the buyer's current home. At that time, and in that place, that was a normal contingency. In fact, I had bought a home with that very contingency.

My understanding is that when the market is hot, The Villages doesn't entertain any contingencies in their new home sales. I could be wrong about that, but that's what I've been told. When we bought our resale, we had a few reasonable ones, primarily the passing of inspections and acquisition of a mortgage. My seller could have told me "no" on the contingencies, and would have had to wait for anther buyer.

In essence, contingencies are just another negotiable aspect of the offer one makes, and like all negotiable aspects, are subject to relative strength of the positions of the two parties, and the relative strength of the desires to get the deal done.

Very true, and even at that it took over a year to sell my NY home

What (s)he said.

When I sold my 1st home in T V my realtor tried to slip in a 6 mos seller contract as if I wouldn't notice and when I caught that she asked why I would only want 3 months as if I were clueless. She then told me, when I asked, that if I wanted the 3 year old house sold "as is" vs the 1% of sale price (standard for T V sellers and realtors) amount for inspection repairs, the house would not sell and be red flagged.

The comment earlier on Village realtors telling sellers they "do things differently here"... absolutely they do.

Interesting concept- I would say your ability to obtain homeowners is tied to the Mortgage clause (assuming you are taking a mortgage) as insurance is a requirement. If you are paying cash not sure but since this is such a challenge- it may be!

LOL... it finally came to this ... INSURANCE in the Villages & Florida has become so expensive that it may discourage people from purchasing homes here... PRICE REDUCTIONS Coming.... Values Plummet

I closed on my home in December, it's a contract so add or change however you want as long as everyone is in agreement. I have bought and sold many properties in my life but buying in TV was quite different.It was my experience that if you are using a TV realtor make you do your due diligence. The referrals may not be the best deal, seems everyone gets a piece of the action here.

I was a licensed Realtor for over 15 years up north. The agents of The Villages are not Realtors (members of NAR) and the “practices” here would not be found in most other places of the country. A mortgage contingency (which is pretty standard practice on a resale and should be considered by a resale seller as a likely contingency of sale) will protect you from a property not being able to be insured, but not from you not liking the insurance premium. A mortgage contingency will also help to protect you should the property not appraise for the sale price (but not as well as an appraisal contingency outside of the mortgage contingency). Once you have a property address it should be fairly easy to get a insurance quotes for coverage before you sign the contract on the home. Where I am from, inspections are done before contract signing so that is never a contract contingency, only a contingency at offer. The house is continued to be shown while you schedule and do the inspections so you could pay for an inspection and then lose the house to a higher offer before you sign the contract. If I was selling here, I would never accept an inspection or insurance contingency in the contract and would tell the buyer to address it before you sign.