How to Remove Contingencies from Your Home Offer

July 30, 2021
October 5, 2021

When it comes to helping your client make an offer, bigger isn’t always better. “The listing agent and seller aren’t just looking for the highest offer,” explains Blake Outlaw, one of our Partner Leads. “They’re looking for the offer that is most likely to close and to close without hassles or hiccups." In other words, listing agents want a contingency-free offer.

Many clients think of a contingency as an escape hatch in the contract. And while contingencies do make transactions “safer” for the buyer, they make it riskier for the seller. That means your client’s contingent offer is a less competitive offer.

The Homeward Cash Offer empowers you to turn your contingent shoppers into cash buyers by eliminating the top three contingencies: home sale, finance, and appraisal. That makes your client more likely to win in a competitive market and positions them to command better terms in less competitive situations. Let’s take a closer look at each of these contingencies.

1. Home Sale Contingency

The Problem:

Until now, buyers who already own a home often had to include a home sale contingency in their offer. It's a cautious choice. But like many agents, you’ve probably seen clients get stuck moving into temporary housing, moving twice or paying two mortgages. And those who can't afford to do that end up missing out on a home they love.

The Solution:

Tim Heyl, Homeward’s Founder and CEO, started this company because of the home sale contingency. “I kept running into the same problem,” explains Heyl, who led a real estate team that became a four-time Inc 5000 company. “Buyers couldn’t make an offer on a new home until they sold their old home.” So one day Heyl tried something radical: he bought the home his client wanted with his own cash. Then, once the client sold his old home, he bought the new home back from Heyl. That experiment became Homeward’s first solution: Buy before you sell.

Buy before you sell enables your clients to purchase their new home with cash before they sell their old home, eliminating the home sale contingency.

The Result:

For homebuyer Casey Shea, Buy before you sell was less risky than a contingent offer. “It saved me from having to move twice and overpaying for my [new] home,” he explains.

Russell Yurack, another Buy before you sell customer, appreciated that eliminating the home sale contingency allowed him to list his old home and then move when the time was right for him. “Being able to buy first and then sell our old home was much nicer than having a time limit to sell and move,” says Yurack.

Watch this video to learn more about how the Homeward Cash Offer works.

2. Financing Contingency

The Problem:

In the past, buyers have used mortgage preauthorization and preapproval letters to make financing contingencies seem less risky. But in many markets, these letters aren't enough to make your offer stand out.

The Solution:

Our approval turnaround time — the time it takes us to underwrite your client and make them a cash buyer — is two days. And cash offers are four times more likely to beat financed bids. “Sellers prefer cash offers because they are much more certain to close,” explains Heyl. So two years after introducing Buy before you sell, we introduced Buy with cash, a second cash offer, designed for clients who don't have the home equity to leverage.  

And what makes the Homeward Cash Offer different from other cash offers? You — the agent. “Most cash offer programs minimize or replace the agent,” explains Heyl. “But Homeward was created by agents, and we built this for agents.” We want every agent to be able to make every buyer a cash buyer. So working with us doesn’t change your agent-client relationship or affect your commission.

The Results:

Homebuyer Mike Galloway believes making a Homeward Cash Offer made all the difference with his recent home purchase. “We were able to make an all-cash offer on a home in an extremely competitive area,” he explains. “If this had been a typical financed and contingent offer, [the seller wouldn't have considered it]."

Ana Syler, another homebuyer, had a similar experience. “We had been putting in offers and knew we were at the bottom of the pile with our conventional loan and first-time homebuyer’s down payment," she says. "Being able to put in a cash offer with Homeward totally changed the game for us.”

Have questions about the mechanics of making a Homeward Cash Offer? Check out our Buy with cash and Buy before you sell guides.

3. Appraisal Contingency

The Problem:

The appraisal contingency is designed to prevent your client from overpaying for a loan and to protect the lender who is financing the purchase. But there are several issues with using an appraisal contingency. First, it slows down the homebuying process. Scheduling an appraiser and getting them out to the house takes time. Second, appraisals are based on historic data, meaning they don’t always reflect current market conditions. And appealing an inaccurate appraisal takes even more time.

The Solution:

We’ve introduced the Dual Appraisal Advantage, our unique approach to waiving your client’s appraisal contingency. “This is the lowest risk and most flexible way to waive the appraisal contingency,” explains Brian Gubernick, our Chief Real Estate Officer. Remember, the Homeward Cash Offer involves two transactions. First, we buy the home your client loves with cash on their behalf. We call this the Homeward Purchase. Then, when they’re ready, your client buys the home back from us. We call this the Customer Purchase. There is an appraisal done during each of these transactions, but if your client qualifies, you can write the offer so that it isn't contingent upon the appraisal. Here's how it works.

When your client is ready to make an offer, you can proceed with the confidence that we've already fully underwritten them to purchase the property they love at the price they're offering. In other words, the property does not need to appraise at sales price. That said, we complete a Preliminary Appraisal during the option period/due diligence to help your client understand how the value of the home might impact their loan and cash to close.

Your client’s lender will order the Final Appraisal for financing purposes. If the Final Appraisal is less than our Preliminary Appraisal, the buyer can terminate within three days and keep their EMD. This happens very rarely, but we understand that even the remote possibility of this happening gives buyers and their agents pause. We assume the risk in this scenario so you and your clients don’t have to.

The Result:

The Homeward Cash Offer wins because it's the most competitive offer — not just because it's cash. That’s certainly what real estate broker Danielle Dolan of HomeSmart Greenwood Village in Colorado, recently discovered. “Before working with Homeward, we were losing out to cash offers even when we bid more,” she explains. “The ability to waive the appraisal contingency on a Homeward Cash Offer in the competitive Denver market made all the difference for my clients.”

For more information about the Dual Appraisal Advantage, read this article. You can also learn more about your client’s appraisal options in this video.

We designed the Homeward Cash Offer to eliminate contingencies and overcome the limitations of a traditional mortgage. What are you waiting for? Turn your contingent shopper into a cash buyer today. Start an application for your client.  

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