Waive Appraisal? (Tempe: sales, mortgage, lender)

[frankjrinaz]

After months of searching in this crazy housing market and having been outbid by people paying cash, I finally got a home offer accepted on Saturday in Tempe in the Sierra Tempe subdivsion. 2,600 SQ ft, tri level, no pool, but will add one and the house has been about 70% remodeled. Just the master bathroom and upstairs carpeting is left to remodel. Asking price 330,000. My agent convinces me to go above asking as we can always fall back on appraisal. I ask are you sure, are you sure. I am told yes. I offer 342K and it gets accepted.

The listing agent insisted the following language be added to the contract "Earnest Money deposit to be non refundable for any reason after the 10 day inspection period". Apparantly this was a back handed way to negate the appraisal contingency in the contract. My agent realized this after he assured me on Saturday when I signed this was not the case. LIsting agent is now like, either take it or I have 3 other back up offers that will waive appraisal.

Would you walk? My concern is why is the listing agent and seller so concerned about the buyer waiving appraisal if they are sure its worth the price I offered?

[DetroitN8V]

The house probably won't appraise and they know that. I think you know that as well. House values have gone up significantly very recently. Just because people will pay certain prices for homes, doesn't mean there are comps to support the recently increased values on an appraisal. There's a lag between demand (which drives the price) and the value an appraiser can pull out of it. If you're financing and the appraisal comes in low, just keep in mind that your down payment percentage will be based off of that amount and anything over that, to get to the purchase price will be additional cash you're bringing in.

[frankjrinaz]

The comps in the area seem to support the price; however its hard to exactly comp as most of the sales have been two stories or single stories, not tri levels. I have a feeling the seller and listing agent are nervous it wont comp, so they want the appraisal contingency waived. The economy still isnt the greatest. I wouldnt pay over the banks appraisal.

[DetroitN8V]

Originally Posted by frankjrinaz

I wouldnt pay over the banks appraisal.

It sounds like you gave up that option (unintentionally, I think). If you're not willing to accept that, and are still within your inspection period, you have no choice but to walk.

[Captain Bill]

Originally Posted by frankjrinaz

After months of searching in this crazy housing market and having been outbid by people paying cash, I finally got a home offer accepted on Saturday in Tempe in the Sierra Tempe subdivsion. 2,600 SQ ft, tri level, no pool, but will add one and the house has been about 70% remodeled. Just the master bathroom and upstairs carpeting is left to remodel. Asking price 330,000. My agent convinces me to go above asking as we can always fall back on appraisal. I ask are you sure, are you sure. I am told yes. I offer 342K and it gets accepted.

The listing agent insisted the following language be added to the contract "Earnest Money deposit to be non refundable for any reason after the 10 day inspection period". Apparantly this was a back handed way to negate the appraisal contingency in the contract. My agent realized this after he assured me on Saturday when I signed this was not the case. LIsting agent is now like, either take it or I have 3 other back up offers that will waive appraisal.

Would you walk? My concern is why is the listing agent and seller so concerned about the buyer waiving appraisal if they are sure its worth the price I offered?

As I understand it: You made an offer. The seller countered with the non-refundable clause. If you don't accept that then there is no contract.

If you're getting a mortgage and the home doesn't appraise, then you'll pay the difference, or lose your earnest money.

No one can tell you if you should walk or not. That is a personal financial decision. How badly do you want the house? How is the house priced compared to the comps? Is it over priced? How long will you live there? You are the only one who can weigh all of the variables in order to make a decision.

[frankjrinaz]

At Captain Bill - The listing agent didnt sneak it in on counter. There was no counter. He insisted that language be in there with the offer. I asked my agent, does that negate the appraisal clause and he assured me no. So I signed. Then the next day my agent comes back to me and goes, I checked with the listing agrent, that language does waive the appraisal contingency. This market has been so frustrating and I find something and now this. I am quite upset at my agent at this point.

[Zippyman]

Originally Posted by frankjrinaz

After months of searching in this crazy housing market and having been outbid by people paying cash, I finally got a home offer accepted on Saturday in Tempe in the Sierra Tempe subdivsion. 2,600 SQ ft, tri level, no pool, but will add one and the house has been about 70% remodeled. Just the master bathroom and upstairs carpeting is left to remodel. Asking price 330,000. My agent convinces me to go above asking as we can always fall back on appraisal. I ask are you sure, are you sure. I am told yes. I offer 342K and it gets accepted.

The listing agent insisted the following language be added to the contract "Earnest Money deposit to be non refundable for any reason after the 10 day inspection period". Apparantly this was a back handed way to negate the appraisal contingency in the contract. My agent realized this after he assured me on Saturday when I signed this was not the case. LIsting agent is now like, either take it or I have 3 other back up offers that will waive appraisal.

Would you walk? My concern is why is the listing agent and seller so concerned about the buyer waiving appraisal if they are sure its worth the price I offered?

With an appraisal contingency, the seller is effectively "at the mercy" of whatever appraiser *your* lender sends out. Even if he's not from the area, even if they send an "apprentice" to pencil-whip the appraisal, and even if the appraiser is "gun shy" about coming in at the real value. Appraisers can be sued years after-the-fact for giving "high" valuations, based on "retrospective" appraisals. Many of the big banks have went after appraisers for their own poor lending decisions, so appraisals have been very tight for the past few years.

I had a very candid discussion with a VA appraiser last year, about a property a client was buying - his words were *not* that the property wasn't "worth" $xxx, but that *he couldn't support* a value of $xxx. Even though he *knew* the home couldnt be purchased for a nickel less, even though he knew the appraisal would kink the deal. That low appraisal killed the deal, and a subsequent buyer actually paid *more* than my client had the same house under contract for.

An appraisal is just an opinion of value - different people will have different opinions.

[Zippyman]

Originally Posted by frankjrinaz

At Captain Bill - The listing agent didnt sneak it in on counter. There was no counter. He insisted that language be in there with the offer. I asked my agent, does that negate the appraisal clause and he assured me no. So I signed. Then the next day my agent comes back to me and goes, I checked with the listing agrent, that language does waive the appraisal contingency. This market has been so frustrating and I find something and now this. I am quite upset at my agent at this point.

You can get an appraisal done in ten days.. not sure how that defeats the appraisal clause, by itself.. get your paperwork into the lender, & they often order the appraisal right then..

[AZJoeD]

This clause if I read it correctly does not negate the appraisal contingency, but if you choose to cancel after the appraisal you will not get your EM back. These are two separate items. I realize that loss of EM could be significant (do not know how much you pledged), but if you were not prepared to pay the offer price for the home or do not have the cash to close it, you should not have offered it.

I like you have lost several bids because of competing buyers overbidding. Some have gotten away with it, others have not. I could not put my client in the situation were they were paying more than they could afford.

It is your decision, if you have the cash too close. If you close today, you will be paying more than the house is worth. However now values are on the upswing, so it may be a moot point in 6 months.

[newfrontalex]

Originally Posted by AZJoeD

This clause if I read it correctly does not negate the appraisal contingency, but if you choose to cancel after the appraisal you will not get your EM back. These are two separate items. I realize that loss of EM could be significant (do not know how much you pledged), but if you were not prepared to pay the offer price for the home or do not have the cash to close it, you should not have offered it.

I like you have lost several bids because of competing buyers overbidding. Some have gotten away with it, others have not. I could not put my client in the situation were they were paying more than they could afford.

It is your decision, if you have the cash too close. If you close today, you will be paying more than the house is worth. However now values are on the upswing, so it may be a moot point in 6 months.

Excellent. And may I add: "Fire your RE agent" for not knowing the basics of contracts in this simple environment.