No Mortgage Contingency

In this current "white hot" market, it's become a little more common especially. Still, IMO, not a good idea to accept this.

you could always get a contract out and do expediated underwritting. Once you get the commitment letter mortgage contingency aren't in effect anyways.

People who may be offering less or REALLY want the property may offer to waive the mortgage contingency to make their offers more attractive. Unless you're willing and able to throw in additional equity if the appraisal comes in low, I would not waive.

Sorry. If you want the home and it is competitive (ex multiple bids), I would think strongly about waiving it. It is scary to do but in my recent search it was necessary to waive it if you required financing. It is a huge risk but can pay off if you can get the financing. I would definitely be quite confident in my ability to pay 1) the purchase price, 2) any amount the home sells for above the possibly appraisal price.

i bid on countless Brooklyn coops and houses from Dec2012 to June2012. Every single one I was close or best on said they would only move forward with no mortgage / appraisal contingency. The one i ended up winning i had to waive the contingency and also had to make up the 75k appraisal difference. Make sure you have gotten preapproval from more than one lender and be ready to make up any appraisal differences with cash or more leverage

This is a tough one - Think long and hard about waiving the contingency. We live in a city where anything can happen at any time - from terrorist attacks to Lehman going down to unexpected job losses. Why would you willingly put yourself at risk?

if you have the cash to buy the apt outright, and don't mind doing so, remove the contingency. If you do not, then do not.

Can you afford to lose your 10-20% down?
If not, don't waive the contingency. All risk and very little gain for a well-qualified buyer. There will always be another place to buy, but where is your endless supply of flushable cash coming from?

I am going to go out on a limb, since I know that the standard line is that you are incurring a huge risk, there is always another place (where presumably you won't need to waive contingencies), and that you have to be prepared to make up the difference in cash.

Having thought long and hard about waiving my mortgage contingency, I would make these points:
- Once you put the deposit (10% of purchase price standard), you have to be willing to lose that. You are not going to be forced to pay the other 90% if you cannot afford it. Of course 10% is a huge amount of money, but that is the limit of your liability.
- Risk vs reward: The risk is losing this deal, the reward is to get the home.
- Always another apartment: really? Ask anyone searching or like the people who were bidding in the past year. To even have an accepted offer is a success. To find one where you can waive the contingency - it may happen, for sure, but your pool of potential apartments is smaller. This also assumes you are not competing with any cash offers.
- Go back and read old NY Times real estate articles. 2005: Everyone is waiving their contingency and there are bidding wars. 1998: Everyone is waiving their contingency and there are bidding wars. People have been putting noncontingent offers for years in NYC, but it is becoming more of a norm in today's white hot market unfortunately.
- Appraisals: My advice, get two loans processed and have two appraisals. You will pay about $1000 for the extra appraisal, but it will help protect you if your apartment appraises for less than purchase price. If the difference in the two appraisals is significant, this can be a big savings. (The bank will only lend based on appraised value.)
- For me, I did two appraisals. I won an apartment significantly over ask. One appraisal was at the selling price and one was more than the selling price. I got lucky with that.
- As for the OP's question, how common is it to waive the contingency: If you are going above asking price, they are going to ask you to waive it because they want to know that you will pay the difference between the appraised value and sale value. You can also waive your appraisal contingency (thus stating that you will pay the difference) and keep the mortgage contingency (ie that if you can't get a mortgage for another reason, you are free from the deal).
- Finally, make sure the building is approved from the bank you are working with because that is one part of the mortgage you can't control or help with more money.

As others have said, if the appraisal comes in low, then you may only receive a mortgage based on the appraised value leaving you to fund the difference.

When faced with this same issue, I ultimately got comfortable with non-contingency. I did my own set of comparables that had closed and became comfortable that even in a worst case appraisal scenario (assume your appraiser values it against estate condition apartmetns that look smaller in worse locations), I would be able to fund the difference. Simply put, I didn't believe the 10% was ever at risk.

If you feel the deposit is at risk, then it turns into a 6-figure gamble. I for, one, probably haven't got the cohones for that even if the odds were in my favor.

>>
- Go back and read old NY Times real estate articles. 2005: Everyone is waiving their contingency and there are bidding wars.
<<

The risk is much greater in 2013 than it was in 2005. It is not nearly as easy to get a mortgage now as it was in 2005.

The OP means, from the seller's perspective. From old posts, his parents have a house in Bergen Beach they're trying to sell.

actually, im selling my parents home and they found a rare 3 bed rental with a terrace in their area....so i wanted the buyer to waive the contingency so that my parents could sign the lease next week(ie when they go to contract) but since they now have to wait for a mortgage (buyer wont waive it), by thte time the mortgage gets approved ie 4 to 6 weeks, the rental will be gone......and rentals in that building rarely come up.....also, just found out the buyers are pre-approved and make a very good salary but only have 2% for escrow and will deposit 20% when they sell their property.....concerned that if my parents house appraises for less, the buyers wont have the money to fund the differance. My parents home has been on the market for 1 yr with no offers(ie basement flooded during sandy eventhough they were in zone b)....so, perhaps risk it and see what happens ?

If you have a commitment letter (and can meet all the contingencies in the letter), you have 20% down and can afford to cover the difference between the purchase price and appraisal value, then go for it. Otherwise, you are taking a big risk.

Well, after asking if buyer would be able to waive mortgage contingency(answer was no and i accepted that) and then asking if they would be able to fund differance if for some reason house appraises lower than accepted price, there has been 2 days of silence....i think i scared them.....they dont have much in liquid assets but have good income ....boy i hope this doesnt fall thru...its the only solid offer they have gotten in 1 yr...

Waiving mortgage contingency makes sense in a situation with multiple offers, over ask, and potentially cash offers. My question is, if you have had one solid offer in a year and there is no competing offer, why are you asking for them to waive their contingency and scaring them about a potential low appraisal?

Buying a place is very stressful. Having an accepted offer and then having terms changed is even more stressful. Brokers can actually help in that situation because they can potentially filter emotions (or amplify them with bad brokers). Keep that in mind when dealing with your buyers.

i was asking because they have very little liquid assets(2% at contract) and financing 80% of the deal(they are getting 20% when they sell their current place).....i just didnt want to have 6 weeks pass and then find out that they wouldnt be able to come up with a differential if the house appraised a little lower than accepted offer....at that point, we would have to start over again after the house being off the market for 6 weeks(and they would be screwed because they would have sold their place)...but i shouldnt have said anythng.....it was stupid.....more than likely the house will appraise well but i guess i got nervous...for both parties.

I'd be wary of sharing info on a public forum, fwiw. Good luck to you.

Agents in Brooklyn are telling me no mortgage contingency contracts are the new normal, that you can't buy otherwise. Kinda looks that way from here.

We can pay "all cash" (I hate the term, I imagine wheelbarrows of $100 bills) but we'd prefer to get a mortgage for 25% of the price so we can keep more money in the financial markets.

So we're happy to waive the mortgage contingency, but I'm wondering, does doing so prevent us from getting a mortgage as a financial planning move?

No.

I'll never buy in a market that doesn't allow mortgage contingencies. Except at the high end this defines bubble for me.

>I'll never buy in a market that doesn't allow mortgage contingencies. Except at the high end this defines bubble for me.

Please. 4, 3, 2 years ago you wouldn't buy. Bubble prices you said. But then 18 months ago, as prices rose, there you went.

You are so dumb. For my particular area I bought at the low point of the market. With 10% down.

Right, a sub-prime mortgage in a sub-prime area.

Hi riversider! Yes, like a mortgage issued through private banking for a modest apartment for someone earning a seven-figure income with superb credit is sub-prime.

There you go again bragging about how much money your husband makes.

Well, you just can't have it all your way. You are the one who said sub-prime, fool.

Btw, does anybody love you? Who would? Or spend time with you? You seem rather sociopathic, maybe you should seek help.

3 questions, don't even wait for the answer, then give a psychiatric opinion for which you have no qualification. Nice.

No, no need to issue one question at a time. You could answer all three. I can see why you would not want to, though.

What exactly are you? You "issue" questions?

Who are you? How many mortgages have you applied for? Had? Where do you live? Etc. You have zero credibility.

What do you mean I have no credibility? I haven't made any claims about me that could be credible or not.

does saying the same thing hundreds of times add to your credibility?