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Lately, I've been seeing buyers who offer more than they want to pay for a house, with the hopes of the appraisal coming in lower.
The idea is to offer top dollar to get the contract, then negotiate the price down when the appraisal comes in lower. It works sometimes, but I've also seen times when the appraisal comes in right at contract price and the buyers end up paying more than they wanted.
I can't believe people are crazy enough to gamble like this.
In a multiple offer situation where someone goes over the asking price, I would make the contract NOT contingent on Financing or Appraisal. I would also require the Appraisal to be complete and delivered within 14 days.
Yes. Its a tactic to get your bid to the front of the line. Once in buyers feel that they can twist the sellers arm because they are in the negotiating stage. It's a low down tactic but it's done all the time. It was really big at the beginning of the year
Simply make the contract not contingent on appraisal
There is no way I would ever bid more for a house than I was willing to pay and hope the appraisal saves me.
Most of the time I've seen this happen, there wasn't a bidding war and the buyer's offered list price or slightly above. And, typically FHA financing, so the contract is contingent on the appraisal.
It just amazes me that people are willing to take this kind of chance.
There is no way I would ever bid more for a house than I was willing to pay and hope the appraisal saves me.
Most of the time I've seen this happen, there wasn't a bidding war and the buyer's offered list price or slightly above. And, typically FHA financing, so the contract is contingent on the appraisal.
It just amazes me that people are willing to take this kind of chance.
Oh absolutely. I was looking and I had agents get back and literally say your offer isn't good enough I have a offer for 40k more on the table. I have great credit 20 down and no financial issues. But I only bid a good solid offer. I was looking for a new house to move into which we planned on 15-20 year occupancy. I have since decided to wait. None of the houses I bid on sold after a prolonged in and out pending. And sold months later for about what I offered or less. In some cases I was called back to see if I was willing to buy. By then interest in the house vaned and I had other things to do. I only overbid on one house told they went with someone else, the house went through two other bidders who walked and I was third in line and that turned to crap in the inspection so I walked. Funny thing house sold for 405. The house next door is in foreclosure sale. Been that way for two years asking private is 360k. So when that house gets sold the guy who bought for 405 is gonna be really unhappy if he tries to sell
Funny thing house sold for 405. The house next door is in foreclosure sale. Been that way for two years asking private is 360k. So when that house gets sold the guy who bought for 405 is gonna be really unhappy if he tries to sell
I had an agent have a single mom bid 25 - 30K higher, saying the value would never come in.....and you guessed it, it did. It blew everyone away, but it was just before the bulk of foreclosures hit that neighborhood.......and it wasn't a 500K house either, much less. The buyer was beyond ticked off. I didn't find out about the scheme until I sent the appraisal to the buyer. It made it through underwriting. It put the buyer in her personal uncomfortable zone. Really sad. Realtor didn't care, said it was the appraiser's fault. I worked with the Realtor on a couple more. I couldn't work with her. Her clients all came out on the other side battered and bruised - and I feared getting caught up if someone complained. (This was in 2009/2010 for those wondering - well after HVCC).
Don't ever let your appraisal set your sales price and never let your appraisal set the repair conditions you want as a buyer. Both will backfire.
It's absolutely nuts to do that. We had the exact thing happen to an appraiser in our office a few months ago. A couple made an offer on a home for the list price thinking that two sales in the development that had closed 4 months earlier (prior to the busy season and built by a builder who wanted out of that development) for about $50K less than their offer would make the appraisal come in lower. All of the homes are similar in size and finish out. Fast forward to when the appraisal was ordered and performed 3 more houses closed in the mean time all for significantly higher than the older sales and the crap hit the fan. These homes were in the in the $700-800K range. The buyer called the appraiser to complain about the value and said their agent suggested that tactic.
Buyers are constantly looking for a way to lower the sale price. For years (around here), buyers have been using the inspection process to lower the price of the house. They ask for exorbitant amounts to fix minor problems or ask for things to be fixed that are not defects. They hire inspectors who virtually make up defects and have contractors come in to give inflated quotes. So really, this is nothing new. In the end, whether your inspector says the house is falling down or your appraiser says it's worth way less than what you offered, the seller still has to agree to the price adjustment.
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