U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate
 [Register]
Please register to participate in our discussions with 1.5 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Jump to a detailed profile or search
site with Google Custom Search

Search Forums  (Advanced)
Business Search - 14 Million verified businesses
Search for:  near: 
Reply Start New Thread
 
Old 08-21-2012, 05:49 PM
 
Location: Austin
4,425 posts, read 8,288,562 times
Reputation: 3552

Advertisements

Quote:
Originally Posted by farcry80 View Post
To Falconhead:
I understand what you mean about the financing contingency but not sure how that translates practically. If I don't have the money to make up the difference but can borrow from a relative, does that mean I still have to buy it?
That's up to your lender on whether or not they'll allow gifted funds. Your relative would have to sign something that states the money is not a loan and you do not have to pay it back. Some relatives aren't comfortable signing such a letter if they expect you to pay it back.

Basically, if the sales price is $200k and you said you were putting down 20% to finance $160k, but then the appraisal comes in at $190k and your loan amount was now 80% of that $190k, you could cancel the contract because the financing terms are not what you agreed to.
Reply With Quote Quick reply to this message

 
Old 08-21-2012, 11:53 PM
 
397 posts, read 241,382 times
Reputation: 207
Quote:
Originally Posted by MikeJaquish View Post
I have had a couple of cash buyers who waived appraisal to make their offers stand out.
Their choice.

I would be very cautious about a seller who asked for a buyer to waive appraisal contingency, particularly on a non-cash transaction.
Not sure what you are talking about Mike, but in NC (where I believe you work) the standard, by virtue of omission, is to waive the appraisal contingency. The standard NC RE Association contract is not contigent upon appraisal or the buyer obtaining financing. Perhaps this is news to you?

For states that have the appraisal contingency I think every seller should consider amending this. If a LA lets their seller keep it in, they are de-leveraging their seller position. What if a house appraises for 5k short. At this point seller either has to drop price by 5k or walk. Given that they will likely be 3-4 weeks into the contract, the seller is stuck and will have to concede. If the appraisal contingency is left in, it should specify a range (short) that would be acceptable to buyer, perhaps 1-2%.

If a buyer doesnt have the $ firepower to kick in 1-2% extra cash, they probably are in risk of not qualifying for the loan. I would look at the buyers willingness to waive this contingency as a metric of financial stability. If they have the funds and like the house, the buyer in the end will kick in the additional cash to make the deal happen.
Reply With Quote Quick reply to this message
 
Old 08-22-2012, 05:59 AM
 
Location: Illinois
718 posts, read 1,132,370 times
Reputation: 949
That's like saying that you will pay whatever the auto dealer wants for that 2010 Cadillac, no matter what it is worth? Never fall in love with a property and always be willing to walk away. If you have a lender, you have to have an appraisal...their, paid for by you, determination of value. If the house doesn't measure up, you don't get the money? Are you buying anyway? Something fishy here.
Reply With Quote Quick reply to this message
 
Old 08-22-2012, 06:18 AM
Status: "Apple Pie!" (set 16 days ago)
 
Location: Cary, NC
19,604 posts, read 31,172,187 times
Reputation: 16643
Quote:
Originally Posted by RE Skeptic View Post
Not sure what you are talking about Mike, but in NC (where I believe you work) the standard, by virtue of omission, is to waive the appraisal contingency. The standard NC RE Association contract is not contigent upon appraisal or the buyer obtaining financing. Perhaps this is news to you?

For states that have the appraisal contingency I think every seller should consider amending this. If a LA lets their seller keep it in, they are de-leveraging their seller position. What if a house appraises for 5k short. At this point seller either has to drop price by 5k or walk. Given that they will likely be 3-4 weeks into the contract, the seller is stuck and will have to concede. If the appraisal contingency is left in, it should specify a range (short) that would be acceptable to buyer, perhaps 1-2%.

If a buyer doesnt have the $ firepower to kick in 1-2% extra cash, they probably are in risk of not qualifying for the loan. I would look at the buyers willingness to waive this contingency as a metric of financial stability. If they have the funds and like the house, the buyer in the end will kick in the additional cash to make the deal happen.
Appraisal is not a separate contingency of itself in the NCAR contract, but is listed as a component of buyer due diligence and buyer responsibility to assure adequate appraisal.
Buyer can terminate during due diligence for any reason, appraisal at less than contract sales price being a reason buyer may choose.

No one is forced to use the NCAR contract, and some other contract documents allow for appraisals.

An aggressive cash buyer can decline to have appraisal performed regardless of the contract document used and can use that stipulation to make the offer look stronger to seller.

As usual, your advice is abysmal. Innocent people with little background in real estate who come here looking for lucid input would do well to run anything you say past a sober attorney.

Last edited by MikeJaquish; 08-22-2012 at 06:52 AM..
Reply With Quote Quick reply to this message
 
Old 08-22-2012, 07:12 AM
 
397 posts, read 241,382 times
Reputation: 207
Quote:
Originally Posted by MikeJaquish View Post
Appraisal is not a separate contingency of itself in the NCAR contract, but is listed as a component of buyer due diligence and buyer responsibility to assure adequate appraisal.
Buyer can terminate during due diligence for any reason, appraisal at less than contract sales price being a reason buyer may choose.

No one is forced to use the NCAR contract, and some other contract documents allow for appraisals.

An aggressive cash buyer can decline to have appraisal performed regardless of the contract document used and can use that stipulation to make the offer look stronger to seller.

As usual, your advice is abysmal. Innocent people with little background in real estate who come here looking for lucid input would do well to run anything you say past a sober attorney.
in NC, during the due diligence period, the buyer can walk if he doesnt like the color of the carpets...you do not need a reason and there are no contingencies during the DD.

The NCAR contract sets a due diligence period and amount that is negotiated b/t the seller-buyer. The buyer does not get this back unless he closes at which time it is credited to sale. The buyer has option to walk away during DD and lose his DD money (usually less than 1k).

Once you past the DD and enter the EM phase there are almost no contingencies that allow for the buyer to get his EM back short of the seller breaching contract. Lack of financing or a short appraisal do not allow the NC buyer to recover EM. Are you arguing that financing or appraisal is a contingency in NCAR contract? Do you typically use these "other forms" that you reference?

What are you referring to as abysmal advice? This is the second time on CD that you have stated something that contradicts your state's Offer To Purchase contract. Just wanted to clarify this contingency issue for the the "innocent people (NC residents) with little background in RE."
Reply With Quote Quick reply to this message
 
Old 08-22-2012, 07:48 AM
Status: "Apple Pie!" (set 16 days ago)
 
Location: Cary, NC
19,604 posts, read 31,172,187 times
Reputation: 16643
Quote:
Originally Posted by RE Skeptic View Post
in NC, during the due diligence period, the buyer can walk if he doesnt like the color of the carpets...you do not need a reason and there are no contingencies during the DD.

The NCAR contract sets a due diligence period and amount that is negotiated b/t the seller-buyer. The buyer does not get this back unless he closes at which time it is credited to sale. The buyer has option to walk away during DD and lose his DD money (usually less than 1k).

Once you past the DD and enter the EM phase there are almost no contingencies that allow for the buyer to get his EM back short of the seller breaching contract. Lack of financing or a short appraisal do not allow the NC buyer to recover EM. Are you arguing that financing or appraisal is a contingency in NCAR contract? Do you typically use these "other forms" that you reference?

What are you referring to as abysmal advice? This is the second time on CD that you have stated something that contradicts your state's Offer To Purchase contract. Just wanted to clarify this contingency issue for the the "innocent people (NC residents) with little background in RE."
Well, I'm not trolling. And I am not misleading innocent people anonymously just for the sophomoric sport of it.
I misrepresented nothing in this thread, nor anywhere else and have continually enjoyed the luxury of integrity, i.e., standing behind my posts.

Regarding a bogus question, with no practical or legitimate "Yes" or "No" answer that would serve consumers in any way:
Buyers who need an appraisal for purchase find in the NCAR Standard Offer to Purchase and Contract that they will not exit DD Period and have a right of appraisal contingency. If they want to appraise and to make the resulting opinion an issue in the transaction, the document indicates that they will do so within the DD Period, or negotiate an extension of the period for that purpose.
So, is appraisal a line item stand alone contingency? No.
Is it addressed? Indisputably.

If you ever actually become involved in a real estate transaction, or even a 2nd one some day, you may realize that not all sellers accept standard forms.
Builders, asset mangers, bankers, investors, relocation companies are a few very common examples. We even had a recent thread here regarding using off the shelf forms from Staples, etc. Some forms incorporate contingencies for appraisals and some will not.
Reply With Quote Quick reply to this message
 
Old 08-22-2012, 09:04 AM
 
1,553 posts, read 1,467,068 times
Reputation: 893
OP, by your (& your realtor's) estimation, what is the purchase price compared to comps? My appraiser basically used older MLS data and did some adjustments. It wasn't rocket science and I came close based on publically available information.

As others have mentioned, you may still be covere by the financing provision. Do you have aditional cash on hand, if the bank won't lend you 80% of the purchase price?
Reply With Quote Quick reply to this message
 
Old 08-22-2012, 09:41 AM
 
48 posts, read 108,605 times
Reputation: 22
@blazerj: It really depends on how low the appraisal comes in for the money. If it is $40k less then no, but if $10k less then yes.

I do think the house is pretty well priced and we would really want to go ahead with the purchase if there is only a 10k difference. obviously I have no clue what the appraisal will actually be but I am reasonably confident it won't be too far from the pruchase price.

If this clause is removed and we do go ahead with the purchase contract, how would the financing contingency clause work here? If the appraisal came in low and the bank is only willing to lend upto the certain new lower amount, do I HAVE to make up the difference at the risk of losing the earnest money? At this point if I could make up difference but did not want to, could I walk?
Reply With Quote Quick reply to this message
 
Old 08-22-2012, 09:52 AM
 
Location: Ocala, FL
2,158 posts, read 2,076,907 times
Reputation: 1608
As a Realtor myself I would advise a buyer not sign any contract that the seller insists upon removal of the appraisal contingency. Just my $.02 worth.

I am not an attorney and I am not offering legal advice.

Sent from my DROID RAZR using Tapatalk 2
Reply With Quote Quick reply to this message
 
Old 08-22-2012, 03:57 PM
 
1,553 posts, read 1,467,068 times
Reputation: 893
I would ask your lawyer (maybe realtor, if you trust them). My guess is that you may lose money, depending on how the contract was written. When I bought my place, the appraisal was required by the bank, and if it came back ~$10K low, I would have paid/ renegotiated. If it came back $40K lower, I would have walked and lost nothing (other than some lawyer fees), but that is how my contract was written.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $84,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate

All times are GMT -6.

2005-2014, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25 - Top