There are certainly changes coming for the New York real estate market, but it is still a hard time for people to buy new properties. There have been many bidding wars over homes in recent years in New York.
You want your offer to be as tempting as possible for the seller, which means not only offering the highest and best amount you would pay for the property but also finding other ways to stand out from the crowd. Some buyers have taken to omitting contingencies when they make an offer and essentially commit to following through with the purchase no matter what.
Do you really need contingencies in your offer when buying real estate in New York?
Contingencies give you an escape plan
You never know the true condition of a property when all you have done is walk through at once or look at listing photos on the internet. You need a careful inspection performed by a professional to know the state of the critical systems in the home, like the furnace and the foundation.
When you make an offer, your earnest money is at risk. Contingencies give you an opportunity to cancel the closing while protecting the earnest money that you deposited as a show of good faith when making the offer. You never know if there could be an issue within the inspection, which is why an inspection contingency is important. It gives you leverage to renegotiate with the seller when the property is not in the condition that you expect it to be.
Financing contingencies are also important, as your lender may not issue a mortgage, possibly because of an appraisal gap or a change in your financial circumstances, such as the loss of your job prior to closing. While sellers obviously prefer offers that will never fall through, buyers put their capital at risk if they don’t include contingencies when making an offer.
Balancing your own protection with the desire for property
It is easy to lose track of the big picture when attempting to buy real estate in New York. The process can become so competitive and aggressive that you don’t think about the long-term implications of your choices.
When you have someone guiding you and looking out for your best interests, you are less likely to fall victim to that false sense of competition and set yourself up for failure with a contract that does not adequately protect you. Focusing on long-term financial stability and legal protections will take a lot of the risk out of residential real estate closings, and contingencies are an efficient way to protect yourself when making an offer.