Anybody bought at house without an appraisal contingency?
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Anonymous
| My agent is suggesting we use this strategy to revise an offer for a house in a competitive bidding situation. The house listed at $750K. We offered $745K, but with an escalation clause to $762.5K. I feel as though the $745K is a fair price, but we've been told by the listing agent that they have 3 very similar offers and haven't yet made a decision. We would really like to get this house. Any experiences out there with dropping appraisal contingency? |
Anonymous
| OP Here: Sorry about that typo in the Subject line. Meant to say 'bought a house'. |
Anonymous
| Alot of people did this during the "boom" . I would not advise dropping the home inspection clause |
Anonymous
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We did it in 2005 when this was common, but ponied up for the appraisal before bidding opened so we were still going into it with open eyes. Fortunately, we only had to do this once.
If there's no time for getting an appraiser in there, I probably wouldn't do it. |
Anonymous
| Do you have the cash to make up the difference if it does not appraise? |
Anonymous
|
It probably depends on how much financing you need. The bank may not approve your loan if the appraisal amount is below the amount required for your loan. You could be out the deposit escrow which is no skin off the nose of your realtor but a loss to you. If you are not paying a significant % off in cash then I would consult a real estate attorney on your liability doing this and be cautious about trusting your agent.
The second issue is whether you would be still be willing to 762 if the appraisal came in at 700. Markets go up and down. If this is the perfect house for you, the neighborhood you want and you plan to live there for 10 years then it may not be an issue. I knowingly paid about 30K more than our house was worth at the time but we really liked the neighborhood, the house, and the timing was important to us. |
Anonymous
| The appraisal was contingent on our loan, so no we couldn't drop the option. And it wasn't even a large loan, under $400k |
Anonymous
| OP Here: Yes, we do have the cash to make up the difference if the house doesn't appraise, but I am worried about paying over the value. My agent has suggested that we are in a rising market (North Arlington) and that appraisals can 'lag', but I'm not so sure. |
Anonymous
Are you going to be sick if you lose the house? Are you going to be sick if you get the house for $762K, but find out later it appraised at $725K? You have to decide what is more important to you. |
Anonymous
| 10:57 - I would be HORRIFIED if we paid 762K and the appraisal came in at 700K, even though we would have the cash to make up the difference. I don't think that it would end up this extreme, but I could imagine the appraisal coming in below $740K, which would still be a big hit. How did things work out for you with overpaying initially? Have you regained the value? Like you, it is important to us to get this house. |
Anonymous
Oh- sorry. I misunderstood. The above refers to home inspections, naturally. |
Anonymous
| 11:02 - Yes and yes. Not sure where that leaves me.... |
Anonymous
With a big problem!! 
Seriously, you are going to have to decide which one you can live with. If you aren't going to be able to enjoy the house and feel resentful about the appraisal then you shouldn't do it. |
Anonymous
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I may not understand the situation here, but I thought the appraisal of the house value by the bank offering the loan was a requirement, not something one could waive. Unless you are paying cash?
Really, I do not think it should matter very much to either seller or buyer - you know the prices in the area, can estimate the current and future value yourself, and an "official" appraisal will not be better than that. |
Anonymous
You can waive it as long as you have the cash to make up the difference. The bank will not loan more than the house is worth. |