Waiving the contingency for the appraisal during peaks in the real estate market is a question asked by buyers. Specifically what are the implications to a home buyer if the property does not appraise for the sales price.

In many areas of Contra Costa County, buyers are frustrated as they are making offers on homes week after week and not being the winning bidder. And because the winning offer prices are over list, and in many cases these prices are not supported by any data that would warrant such a price, the sellers are requesting that buyers waive the appraisal contingency. Lenders and appraisers are still cautious in light of the downfall of the market in the recent years.

So what is a buyer to do. The first thing they must understand is if there is a difference in the sales price and the appraisal, when the appraisal contingency is waived, the buyer must come up with the difference. As an example:

  • Contract Price – $600,000
  • Appraisal – $575,000
  • Buyer will need to come up with an additional $25,000 in addition to their original down payment

With every contract our buyers write we provide a “Market Conditions Advisory” This form clearly spells out the legal implications to a buyer if they decide to waive any contingencies.

In the end it is the buyer’s ultimate decision as to how much they are willing to spend to buy a house.

 

About Linda Urbick Linda

has written 252 articles on this blog.


Filed under: General RE Tips

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