David Wickert and Jerry Serketich bring you the latest news on today’s trends, offering tips and tricks to keep you on top of the market.
This week on the Accunet Radio Show:
David Wickert and Jerry Serketich celebrate Accunet’s 20th anniversary by giving you the latest rate updates along with some tips on how contractual contingencies and amendments can help your next home purchase.
This week’s highlights
- Mario Draghi, president of the European Central Bank, has predicted an upcoming European rate cut, but a disagreement in the ECB has caused upward pressure on long-term rates.
- If you’re buying or selling a home, don’t overlook the importance of contingencies and amendments. Home inspection contingencies, the right to cure and appraisal contingencies can make or break a sale.
- On July 28th, 1999, Brian Wickert officially founded Accunet Mortgage. Happy 20th Anniversary to Accunet, and here’s to 20 more!
Today’s economy & its effect on rates
Within the last week, we saw some big headlines, but nothing that drastically impacted mortgage rates. Here are the highlights:
- The Freddie Mac weekly report states that the surveyed rate (which had previously increased by .06%) had dropped by .06%, bringing rates back to a comfortable baseline.
- The GDP is at a strong 2.1% but is down from 3.1% in Q1 2019.
- The National Association of Realtors reported June existed home sales to be inside expectations and mentioned the lack of affordable housing as an ongoing concern.
- The European Central Bank president, Mario Draghi, indicated a rate drop in the near future, but also noted division in the ECB as putting upward pressure on long-term rates.
Home purchase contingencies & amendments
Each home purchase uses an Agreement of Sale (or an equivalent document) stating the terms of the transaction. In the contract, you can choose to include or alter a variety of contingencies to make those terms more favorable.
Unfortunately, not many buyers know about these contingencies and wind up with a less-than-ideal sale as a result. Here’s a quick, handy guide to help you with the benefits of altering 3 specific contingencies to fit your needs (This list doesn’t cover all possible contingencies — just the ones we see getting overlooked the most.):
Home Inspection Contingency
An inspection contingency gives the buyer the right to schedule a home inspection within a specified amount of time. From a buyer perspective, this contingency is great for protecting your money, especially when buying an older home. From the seller perspective, this could spell trouble.
Tip: Since we’re in a competitive market, your offer is almost definitely one of multiple. This means including a home inspection contingency might make your offer less favorable. As a workaround, David and Jerry suggest sweetening the pot with an increased offer amount in exchange for an inspection.
Tune in to hear more about wht happens when a home inspection reveals expensive defects.
Right to cure
As a homebuyer in Wisconsin, if you discover a defect in the home, you don’t have the automatic right to play a part in it getting fixed. That is, unless you negotiate your involvement before the fact with an amended “right to cure” provision.
Without an amendment, the right to cure doesn’t mean the seller has to fix anything. It only gives them the option to make repairs following a notice of defect. Altering the wording in your right to cure can help ensure you buy the home you signed up for.
Tip: An amended right to cure can stress out sellers, since it could mean money out of their pockets. To help your offer stay competitive, consider including wording like, “The Buyer agrees to pay for the first $2,000 of repairs, should any defects be found.” (Of course, you’ll want to work with your mortgage or real estate professional to get the wording just right for your purchase.)
Appraisal contingencies are used to determine how much the home is worth, and to give the buyer an out if they were led to overpayment. Essentially, what the appraisal contingency says is, “If the property doesn’t appraise at or above the accepted offer, the buyer has the right to leave the deal.”
Needless to say, this can be a stressor to sellers, who might not be willing to accept an offer they’re not confident in, even if it’s above the listed price.
Tip: To keep your offer in the running, give your seller some wiggle room. For instance, something to the effect of, “So long as the home appraises at or above 98% of the agreed-upon offer, we won’t leave the deal.” (Again, please work with your specific mortgage or realty professional to perfect the wording.) This builds confidence in the sale and increases the likelihood of an accepted offer.