Palo Alto Sellers: Which is Riskier, A Loan Or Inspection Contingency?

If you are a Palo Alto home seller which do you think is riskier for you, not the buyer, taking an offer with a loan contingency, or taking an offer for your Palo Alto home for sale with an inspection contingency?

This question pre supposed several givens:

1. You have multiple offers from which to choose

2. The buyer has been fully pre-approved by a direct lender, is from this country or has the legal status necessary to obtain a loan, and did not ask for an appraisal contingency.

3. You have done all of the inspections on your Palo Alto home before the sale including property, termite, roof, chimney, and foundation if appropriate.


So assuming all of the above conditions have been met, and you have several offers which are around the same price, which would you prefer?

As a Palo Alto Real Estate Agent my choice is different than what you may think.

I think it is riskier for a seller to take an offer for the home being sold in Palo Alto from a buyer with no loan contingency, but a property/disclosure contingency.


Here is my thinking/experience:

1. Most buyers in this market have ample income and assets to get a loan. As long as there is a strong pre-approval letter a loan contingency should not be a problem. If you have a strong buyer and one bank has a problem with the loan, there is most likely another bank who will do it. With a loan contingency there is only one reason to get out of the contract, and that is the buyer just can not get a loan.

2. A property/disclosure contingency is open ended. The buyer can use any excuse about the property, neighborhood, schools, city government, they want if they want to get out of the contract to buy a Palo Alto home for sale. Also, things can come up on the buyer's inspections that could ultimately cost money if they say they will not buy the house if you don't fix, replace, or do something expensive to the Palo Alto home for sale.

I believe if you have to choose between an offer for the Palo Alto home you are selling with a loan contingnecy, and one with a property contingency, the loan contingency is generally the less risky of the two contingencies.


If you have any questions about selling a home in Palo Alto please feel free to contact me.

Marcy Moyer
Keller Williams Realty Palo Alto
www.marcymoyer.com
marcy@marcymoyer.com
D.R.E. 01191194
650-619-9285