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Old 02-13-2011, 11:32 AM
7 posts, read 12,546 times
Reputation: 11


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.
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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...
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Old 11-16-2011, 03:40 PM
Location: Lead/Deadwood, SD
948 posts, read 2,614,469 times
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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.
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Old 11-16-2011, 07:26 PM
4,567 posts, read 9,777,891 times
Reputation: 6666
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.
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