In her 15-year Realtor career, Deanna Armel only twice has waived a financing contingency while putting in an offer on a home.
Both times were in the last two-and-a-half months, Armel, broker and owner of Kissimmee-based Armel Real Estate Inc., told Orlando Business Journal.
It has become increasingly common for homebuyers to waive contingencies as Central Florida’s limited number of homes continue to draw bidding wars. Contingencies can protect buyers, but they cause the home buying process to take longer. That makes an offer less attractive to sellers at a time when metro Orlando homes are selling faster than they have in 20 years.
Financing contingencies aren’t the only thing agents and their buyer clients forgo to win bidding wars. They also may waive an inspection or appraisal contingency, which lets buyers back out of a contract depending on what an appraiser or inspector finds in the home.
Sometimes, all three are waived. That’s what Armel did when she helped a buyer snag a home on South Mills Avenue for $2.025 million in February. Armel said “never in my life” would she waive an inspection, but that’s what it took for her to beat out dozens of offers for the 4,200-square-foot custom home. “It’s the nicest house I’ve ever seen.”
Data show one in five buyers are waiving common home contingencies. In January, 20% of buyers waived an inspection contingency, and 22% of buyers waived an appraisal contingency, according to a survey by the National Association of Realtors. Those numbers were up slightly from December, when the results were 19% and 21% respectively.
It’s a real estate agent’s job to educate clients on contingencies and whether or not to waive them, said KeAusha Jordan, an agent at Orlando-based Mainframe Real Estate LLC. In fact, Jordan said she prefers her clients not waive multiple contingencies.
However, a lack of homes on the market is pushing many buyers in that direction, she said. “They’ve waited so long, some buyers are willing to waive anything.”
Metro Orlando’s busy housing market kicked into overdrive in 2020, and the region’s home inventory was quickly depleted in less than two years. While a six-month supply of homes is considered a balanced market, metro Orlando in January featured a 0.78-month supply of homes, according to the Orlando Regional Realtor Association.
That’s a significant drop from 3.1 months of inventory in January 2020, according to Realtor association data.
The local residential real estate sector slowed from December to January, but it’s still a competitive market. Existing home sales in January decreased 20.6% month-over-month to 3,033 sales, according to the Orlando Regional Realtor Association. Still, local home sales in January were up 11.2% compared to January 2021.
The median sales price sank 1.4% from $340,000 in December to $335,000 in January. Despite the month-over-month decline, the median price last month was 21.8% higher than the January 2021 median price of $275,000.
Local housing market trends are important, as every home sale in the state has an estimated local economic impact of $90,300, according to the National Association of Realtors. In addition, the housing market often is considered a reflection of the local economy’s overall health.