Bid without a Financial Contingency
When, after a long search, you finally find your dream home, it is time to make an offer. Exciting, but what exactly is a good offer? And how can you make sure your offer stands out from the rest?
One of the ways is to carefully consider the contingencies you include in your offer. These provide protection, but they can also make you less attractive as a buyer. So how do you approach this smartly?
What is a “Financing Contingency”?
The financing contingency is a clause in the purchase agreement that protects you as a buyer if your mortgage application is not approved. If you are unable to secure financing within the agreed period (usually 4 to 8 weeks), you are allowed to cancel the purchase without financial consequences.
Why add a Financing Contingency?
The main reason is protection. Without this clause, you risk a penalty of usually 10% of the purchase price if you withdraw from the deal after the cooling-off period. The financial impact can therefore be significant!
An example:
Suppose the appraisal comes in lower than the offer you made. In that case, you might not receive the full mortgage amount you need. With the financing contingency, you can still cancel the purchase without a penalty because you did not obtain the required mortgage.
Drawbacks of an Offer with a Financing Contingency
In a tight housing market, an offer with a financing contingency may be less appealing to sellers. They often prefer buyers who make offers without this clause, as it gives them more certainty. As a result, your offer might stand less of a chance. This is, of course, also the reason why you often hear about bidding without a financing contingency.
Bidding with Certainty (Bieden met Zekerheid)
To avoid this drawback, you can choose Bidding with Certainty. With this option, you make an offer without a financing contingency, but you are still protected against the risk of a penalty if your financing falls through. It’s essentially an insurance that allows you to safely make an offer without a financing contingency.
How Does Bidding with Certainty Work?
In a no-obligation introductory meeting, I’ll explain how Bidding with Certainty works. After that, you can decide for yourself whether this is the right way to increase your chances of getting the home.
If you wish to schedule a meeting at the office in Eindhoven or Online click Here. The first meeting is completely free-of-charge.