What is the norm lately when you sell an apartment.... With or with out a mortgage contingency ......???

Don't understand the question. Are you asking whether potential buyers will insist on mortgage contingencies? If so, the answer is yes, absolutely.

Is that the norm? Do sellers always make sure there is one? Or is this something that doesn't happen anymore.....

Most buyers will not sign a contract if you insist that there be no mortgage contingency. Of course, the odd buyer here and there may be all-cash or not care, but you will be losing a vast swath of the market if you refuse to grant a mortgage contingency.

If you buy without mortgage contingency, you are almost like an all cash buyer. You will lose your 10% deposit if you don't get the loan and can't come up the cash to buy the apt. I once had to offer to buy without mortgage contingency because the seller had an all cash offer. My offer was higher, but the seller still asked for this, and I spent a lot of time making sure the banks will lend in this building and that I will qualify for the loan. A week later, the seller took the other all cash offer even though they also sent us the contract and we were still refining the wording of the contract. Be careful that you can get a loan in this market before you sign a contract without mortgage contingency. Definitely not the norm these days.

That was not our experience as buyers a year ago. Our lawyer told us we were crazy to expect any seller to grant us a mortgage contingency clause in the contract -- she said it is rarely granted and really not done anymore. We tried asking for it with one apartment we thought we wanted and the seller's lawyer told us no way. We were selling a house in the suburbs to move here and we basically had to wait until that sale went through in order to move forward here.

We didn't ASK for or require a no-mortgage contingency when we recently sold fsbo, but the buyer who made the "best" offer included this as part of their offer. In a multiple-bid situation, it's not always price... I was willing to take fractionally less than the highest offer in exchange for all cash (or up-to 50% financing with no mortgage contingency). Even though the "highest offer" was worth moe $$$, the "best" offer had more security for me.

A seller demanding no-contingency may not get the best offer. But a BUYER offering it will be a in a much better negotiating place.

To me, no-contingency is about a BUYER making a stronger offer. If you can, you should!

It is definitely NOT the norm. Every standard contract of sale has a financing contingency already in it. When inventory was very tight in 2006-2007, the peak of our euphoric phase, yes there were many deals where it was expected that the buyer had to remove that contingency. But since the collapse and reflation, no. Now, inventory is tight and some segments of the market (I dare not speak of them or Brooks2 will show up to say 'its not worthwhile' to discuss actual data) are seeing multiple offers for many desirable products (low floor, unrenovated, no view are not those). In these best n final situations, some sellers may ask the buyer to submit offers w/out that contingency for review. Certainly it adds value for the seller, and when the market is right, the seller can get away with it.

I think it depends on how strong a position the seller believes he is in. If you have a property that is languishing and an offer to buy comes along on the condition of removing the mortgage contingency clause, then I could see how the seller agrees.

I'm with digs. Most buyers ask for a mortgage contingency, but if a property is a little special and goes into a multiple-offer situation (which, yes, does happen even in this slow market) then the seller may well ask bidders to skip the contingency to win the bid. And potential buyers will.

If you're selling, I'd leave the question open at first, and see how your bids start coming in.

ali r.
DG Neary Realty

once again Brooksie, your intelligence level shines on through. Way to add true value to the conversation.

Front Porch and Urbandigs sum it up.
Ireoywis, you mix two issues up here. From your description, it doesn't sound like the mortgage contingency is what you were being denied. What seller's were refusing to do apparently was make your purchase of the apartment contingent upon you selling a home first. That will virtually never be acceptable as a term of a Manhattan RE deal.

I think it is always prudent to have a financing contingency in place if you are a buyer. We have had a few best and finals recently where the seller would not accept any offer with a financing contingency in place. In one case a very well qualified/educated buyer removed this request from his offer.

Regardless of some of the action in the market I always strongly insist a client should not wave his/her right to a financing contingency clause. Better to walk away from such a deal. Even with things improving the credit markets are still to shaky to risk the loss of such a large amount of money.

There have been times where we negotiated specific terms for a FC, say if financing could not be obtained due to a defect in the building (that arises after due diligence) or the specific apartment that was beyond our control and is discovered after the contract is signed.

Also you have to really examine financing contingency language in new developments (or ant contract really). Often there is some pretty unfavorable stuff in there. Like you are forced to accept ANY loan rate that is available to you through the buildings preferred lender should a more traditional rate/loan not be available.

You want to try and specify "fixed rate bank financing" in your offer.

Keith Burkhardt
The Burkhardt Group

Without the mortgage contingency, there's a chance that if your financing doesn't come through, you're still stuck in the contract, and the seller gets to keep your deposit regardless.

In 2005 when I made an offer on a co-op in Midwood (MIDWOOD, mind you -- hardly "prime" Brooklyn, particularly at the time), my attorney spotted the "mortgage NON-contingency" clause, explained to me what it meant, and said that given that it was extremely unlikely I would be turned down for a mortgage it was essentially a non-issue, but for comfort he wanted it removed before I signed anything. I expressed this to the seller's agent. The seller's agent got back to me and said the seller refused to remove the clause. I said I was not interested in her walking away with my down payment if for some reason my financing fell through. The agent assured me that his client was not interested in doing that. I said if that's the case then she should have no problem removing the clause. Again, she refused.

Bullshit, I say. the mortgage non-contingency clause was a convenient way for a seller to win the lottery if your financing fell through and you had to walk away from the contract (and your down payment).

Unless you happen to have enough reserves to buy the property without financing, don't ever sign a contract with a mortgage non-contingency clause ... or expressed another way, without a "mortgage contingency" clause.

As a buyer, I would never give up the mortgage contingency clause unless the seller agrees to lower the price by 5% from my last bid AND I can afford to buy the place without financing. Even as an "all cash" buyer, I would not want to compete with another "all cash" buyer. It's not likely that I would get a good deal in such a scenario. The mortgage contingency can be a very useful loophole in case you change your mind for whatever reason.

i just recently close and insisted that i have a mortgage contingency.. It was Business as usual for the buyer and lawyers to have that in there.

I love you w67th but I think you failed to read my post;

about 23 hours ago
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"I think it is always prudent to have a financing contingency in place if you are a buyer. We have had a few best and finals recently where the seller would not accept any offer with a financing contingency in place. In one case a very well qualified/educated buyer removed this request from his offer.

Regardless of some of the action in the market I always strongly insist a client should not wave his/her right to a financing contingency clause. Better to walk away from such a deal. Even with things improving the credit markets are still to shaky to risk the loss of such a large amount of money."

I should have went into detail regarding the one client who removed the contingency from his offer. It was on a $5M purchase and he was offering significantly less and did this to make his offer more competitive. He was not only pre-approved (not prequalified) for a mortgage, he could easily afford to pay cash.He certainly understood the risks and could afford to take them.

You still may flame me, but wanted my position on this as clear as the diamonds you bought your wife for Christmas.

Aloha,

Keith

Kylewest - No, I am not mixing it up. I understand the distinction you are drawing, but it was all connected anyway. To get the mortgage we needed the sale of the house in the works. We didn't want to sign a contract if we didn't have a mortgage, couldn't get the mortgage without the house sale. One depended on the other so you are not wrong, but the first held up the second. Or something like that. But yeah our mortgage broker needed to know where we were getting the down payment for the apt, which was coming from the sale of the house so she could not commit to us til the latter happened. Whew.

That's splitting hairs. As KW said, it seems you were being denied an effective contingency on the sale of your house, not on financing.

I think Keith has been anything but a bull here. He is exactly what a broker should be -- helping you find the best value out there if you've made the decision to buy. His own outlook, if you ask, is considerably less optimistic than his clients, and he will tell them freely if asked. But first order of business for him is to broker the deal, not play market prognosticator as many brokers tend to do out of unethical and/or uninformed motives.

I.e., when the shit hits the 500 ppsf fan a you predict, you better use him as your borker of choice.

When prime NYC does hit $500 a F2...come join me on my Costa Rica farm with clean spring water,fruit trees and some of that pretty metal buried in old coffee cans (;

"you're on KB. We should probably book the flights now for next spring."

Next spring??? I'm about to take off on a flight to Costa Rica right now. Didn't have much time to pack anything other than my metal detector.

Argh, NO! Agreed to some extent it is splitting hairs in the end in that each depended on the other, which is what I said above, but there IS an important difference and it matters in one's contract, and the contingency we wanted was a MORTGAGE contingency. Of course no buyer would agree to a contingency based on the sale of our house and it would have been ludicrous to expect that -- adding in one more obstacle for everyone to wait out. We wanted a MORTGAGE contingency clause. Then if we did not get a mortgage because house sale did not happen, we could have walked away from the contract. But for wording of contract, or what to ask for in a contract, NO it is not the same. Look at it this way: it is possible we could have sold the house and still not qualified for a mortgage, and then been stuck in a contract, so NO in terms of a contract, the difference is huge.