You just got your offer accepted on your favorite house in North Park. Now you have a certain amount of time to remove all of your contingencies. The California Real Estate purchase agreement notes up to 21 days to remove all contingencies. In today’s competitive market, if your buyer’s agent doesn’t shorten contingency dates when writing your offer, you’ll likely lose out to the competition. Contingency periods are tied to specific timelines, requiring the buyer to complete all investigations within the agreed timeframe and sign off on the contingency.. Below is a list of all contingencies when buying a house in San Diego.
Inspection Contingency
You will have your timeframe agreed upon in the agreement to do your general inspection as well as any other specific inspection, such as electrical, plumbing, foundation, roofing, etc. This does not mean that you wait until the end of that time period to do these inspections. What it means is that by the end of when your timeframe comes, you should already have completed these inspections. Your Realtor should have put together what is known as your “request for repair” if you are going to be submitting one prior to this date and inspection contingencies should be removed by this time.
Request for Repair
After completing all inspections, your Realtor will review the reports with you in detail. A good Realtor will know how to structure a “Request for Repair” based on what comes up in the inspection. Knowing that a request for repair is simply that, “a request”. The seller does not have to do anything that you have requested. However, if you are reasonable with your request, a reasonable seller will consider fixing or renegotiating based on the items requested. On the other hand, if you submit a laundry list of items that were on the home inspection, know that you will most likely turn the seller off and they will either say “No” to everything or decide that they prefer to move on to a buyer that is more reasonable. We have seen this happen many times.
Appraisal Contingency
The appraisal will typically take place within the first 7-10 days of having an accepted offer. You will know pretty soon if the home appraises at the purchase price or not. A third-party appraiser conducts the appraisal by walking through the home, taking photos, and preparing a detailed valuation report. They then send it to the bank that is lending you the money to buy your home. A title company, typically hired by the seller will do a title search to make sure that there aren’t any clouds or liens attached to the home. The lender receives this report to confirm there are no issues with the home. Appraisal contingencies are usually removed alongside loan contingencies, though they can be cleared earlier.
Loan Contingency
Prior to going out and searching for homes for sale with your Realtor, you should already have been pre-approved with a lender. This means that you should have filled out an application, given them your last 2 years of tax returns, current pay stubs, bank statements they should know what your credit score is. This approach puts you ahead of the game once your offer is accepted and escrow starts, helping you stay on track with all contingency deadlines.
If you are working with an experienced local lender, they should be able to have full loan approval within 12-17 days. Remember, you will most likely only have 17 days to remove all of your contingencies and the loan is the last one to remove. The appraisal will typically take place within the first 7-10 days so you will know pretty soon if the home appraises at the purchase price.
Disclosures
The sellers have several disclosures that they must fill out and give to the buyer during the Escrow period. These documents outline past improvements, renovations, or upgrades and specify whether the work was completed with permits or not.
Buyers should cross-check the seller’s disclosures with the city building permit and zoning reports. Work done without a permit or municipal approval may not meet code, potentially creating fire or health hazards. While this isn’t always the case, it’s essential to investigate thoroughly.
The seller must provide disclosures to the buyer within the first 7-10 days. However, in San Diego, you will want to have this within the first 0-3 days.
Your Realtor most likely suggested you write a 10 day inspection contingency period in order to compete with other offers so you must move quickly.
Navigating Disclosures, Inspections, and Contingencies in San Diego’s Competitive Market
Having these disclosures prior to you doing your home inspection is very helpful and informative. The home inspector looks at certain areas of the home pertaining to what they find on the disclosures. Listing agents will sometimes have them upfront and will upload them into the MLS, which is very helpful. This way, your buyer’s agent can download them and go over them with you prior to submitting your offer.
Staying on track with your contingency periods is crucial, especially in a busy seller’s market. You would not want to receive a notice to perform from the seller for not sticking to the contract. If so, the seller can technically cancel the agreement if you are not able to perform the specific contingencies agreed upon in the purchase agreement.
Close of escrow is typically 30-45 days in San Diego, although many times we close in less than 21 days.
If you are thinking about buying a home in the North Park, South Park or any metro neighborhoods in San Diego, contact the McT Real Estate Group. We are located in North Park and would love to help you with finding your dream home for the best price.