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When Should You Waive Your Financial Contingency?

Seattle’s market is on fire. With inventory at record lows, coupled with a huge influx of new residents and low-interest rates, the Seattle area is experiencing an extremely competitive market. Not only is the competition between new and old residents, but also investors. Since Seattle is still relatively affordable compared to cities like New York City and San Francisco, and growing immensely. Virtually on every front, someone wants a piece of the pie, thus making the situation tough for many buyers who are trying to get into the market (or sellers who want to move but cannot because they can’t find a home).

In many situations where we are seeing multiple offer situations, it is not uncommon to get 8+ offers on one listing, many offers are coming in as all cash offers. In such a competitive market, buyers can easily get caught up in waiving their rights/contingencies in the contract, making their offer more attractive to the seller. The less contingencies a buyer has in their offer, the fewer ways for the buyer to terminate the contract. A common contingency that buyers waive is the financial contingency. I assume you have read my last blog on what it means to waive your fanatical contingency. If you have not, I would recommend taking a look before reading further!


So when is the right time to waive your financial contingency? In my opinion, you can waive it whenever you like so long as you have taken the proper precautions, and understand/accept the risks associated with doing so. I would recommend waiving only after you have been underwritten by the lender. Getting underwritten basically means that your home loan has been fully approved up to a certain amount, and all you need to do is give the lender the address of the property you are buying. By doing this, as the borrower, you know for sure that you are approved for the loan (assuming it appraises).

Being underwritten is almost like there is a pile of cash in the bank waiting for you so you can purchase a house. Virtually, the only way you could lose your status as “fully approved” would be by losing your job or tanking your credit before you get the keys. If you are confident in your job and credit, you have done well at controlling the variables that can influence your loan. Those who are underwritten are expressing extreme confidence when they waive financing in their offer to the seller; this can sway the tide in their favor in a multiple offer situation because the seller can tell they have already been approved for the loan. Considering most buyers do not get underwritten and just get pre-approved, this can give a buyer who is underwritten an even more attractive offer. If you have any questions about this, please feel free to contact me via email or phone.

There are other advantages to underwriting, and different levels of “pre-approval” I will discuss in later blogs!

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