U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 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.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 02-13-2011, 11:32 AM
 
7 posts, read 12,546 times
Reputation: 11

Advertisements

I made an offer on a condo here in MA which was verbally accepted. I had originally planned to put 30% down. The offer included the standard clause "unit must appraise at or above purchase price." The seller wants the clause removed. I said no. I offered them $10K less and I would remove the clause. They declined.

My realtor informs me that if I change my down payment plan to 20% I would be protected under the mortgage contingency from my bank and that I would be able to back out if the unit ends up appraising below purchase price.

Is this true? And if yes, that begs the question.....surely the seller knows this. Am I msising something here. I like the place and if I am fully protected would like to proceed. But only if I have the chance to back out if the appraisal is below purchase price without losing any money.
Rate this post positively Reply With Quote Quick reply to this message

 
Old 02-13-2011, 12:24 PM
 
28,461 posts, read 79,325,634 times
Reputation: 18607
Default The seller is clueless and the real estate agents need to think this out too...

As long as you the standard clauses for approved financing, even if you go so far to have counter clause for seller to obtain or provide financing, there would remain an implicit expectation that the place will appraise out.

In such cases the appraisal clause is redundant and can be deleted without effect.

Conversely if you have no out if unable to obtain financing it is silly to have an out for appraisal, as the inability to finance would still leave you dead in the water but could allow the seller to keep escrow ...

If the seller is willing to accept the price you offered AND is prepared to finance the place themselves (or has an assumable mortgage) I suppose the appraisal clause in such a case would be a negative to the deal, but unless these unusual circumstances exist I don't think the seller really understands that one way or another the place is going to have to appraise out...
Rate this post positively Reply With Quote Quick reply to this message
 
Old 11-16-2011, 03:40 PM
 
Location: Lead/Deadwood, SD
948 posts, read 2,614,469 times
Reputation: 855
If you have 25% down and the bank only needs 20% and the appraisal is 5% lower than the offer in my experience the bank won't care and they will still loan you the $ - you would be taking on the difference not the bank so they don't really care. So, no it is not a redundant clause, it is an important one if you don't want to get stuck buying a home that does not appraise for what you offered.

Also in the eyes of a judge, intent can be a major factor at the end of the day, not just logistics and verbiage. When your intent is to have it appraise, you should be 100% sure that you are protected - removing a clause after the fact could potentially make it look like your intent showed no interest in the appraisal amount, just as the sellers requested -

Keep in mind I could be totally wrong, (as well as others on this forum) but when a MLS or state approved form includes certain items, it is generally for good reason, so when taking advise from others against what the lawyers that wrote the forms in your state is not a good idea IMO.

So at the end of the day - is it important? do you feel you need to be covered? If your in question on your agents advise then I would think a lawyer should be your next adviser, not a stranger on a forum.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 11-16-2011, 07:26 PM
 
4,567 posts, read 9,777,891 times
Reputation: 6666
Quote:
Originally Posted by nycjane View Post
They declined.
Tell the realtor the clause stays or you walk away. Dont get taken for a ride. Be prepared to walk away. There will be other condos.
Rate this post positively 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 $104,000 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 > Mortgages

All times are GMT -6. The time now is 10:26 PM.

© 2005-2022, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - 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, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top