When people make an Offer to Purchase a home they want to buy, it will include a price they wish to pay, a preferred closing date, inclusions and ex- clusions of items in the home, contact info of parties in the transaction (buyer’s names and their agent and their attorney, and the seller’s names and their agent and attorney), and their contingencies. If there are “no con- tingencies”, as we often see when there are multiple offers on a home, it means it is not subject to having any inspections; having to wait 30 to 45 days to see if the buyer gets a final approval on a mortgage even though the buyer earlier provided info on a pre-approved mortgage; or providing a signed fully-executed contract on the buyer’s buyer’s (this possibility is not a typo) current property. That property could be out of town. Any contingency added to the offer increases the risk that the seller has to assume that the buyer may not get to the closing table in a timely manner and at the price promised to the seller in the original Offer to Purchase. The sellers are look- ing for the “best” offer, which may not be the “highest” offer. They may choose to give up some money and select an offer with less risk. Their agent will help gather the facts to assess the risk.
Contingencies can be a potential “out” for a buyer from moving forward on their earlier agreement because maybe the inspection turned up issues ( i.e. the inspector says it needs a new septic system or it needs a new roof or the furnace is “beyond its useful life”). If for instance, there is a mortgage contingency or an appraisal contingency, the appraiser, hired by the mort- gage lender, says the home is only worth $100,000 less than the agreed up- on price that is shown in the signed contract, it could kill the deal. If the signed contract has these contingencies written in the Offer to Purchase and later in the signed contract, then that buyer may either walk away from the deal or try to renegotiate the deal with the seller, and then change the con- tract with an addendum of the new agreement which could include a price adjustment or saying that the owner will fix certain items and provide copies of paid receipts for the items corrected before the house will close. During this time when contingencies are being cleared up and approved the seller cannot be sure that their buyer can really be able to close on that property. If there were multiple offers, those other back-up buyers will probably have moved on to another property, or they may have cooled off about that house when they hear the deal fell through with another buyer.
A “no contingency” contract means the buyer will take the house “as is”. People need to be careful when they say “no contingency” and understand what it means!
Analysis: Although w e Sold far less than in 2021(a record setting year!) and 2022 by mid - year, looking back through the last decade, selling 250 homes is rather normal. In 2009, during the Financial Crisis we only Sold 97 homes, the lowest I have ever seen. More amazing is that we current- ly have only 146 homes in inventory. The 10 years Pre-Covid, our inventory ranged form 556 to 728 homes. A great deal is because homes now only remain on the market for less than a month instead of 5 to 6 months. If we had more inventory, we probably would have had more sales.
Analysis: Like single family homes, although there w as a decrease in the number of units Sold by mid-year when compared to 2021 and 2022, the 95 units sold year-to-date exceeds all the years since 2007. In 2009 unit sales were only 39. The decline in inventory, decline in new listings, and decline in days on mar- ket have created a shortage of supply of condos and co-ops priced up to $2MM. New larger luxury condos were built and sold since 2020 which has contributed to rise in reported average and median sale prices. Pending sales is low at 27 units because of the extremely low only 3 months supply available on the market now.
