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I know that if you're getting a mortgage you have to get the property appraised, but what about cash sales? I am planning to pay cash for the condo I am interested in. My realtor thinks I should get the property apprised, my friends who have bought homes say no. It is not in the wording of the Texas condo sales contract, so could the wording the offer is contingent on an appraisal be added? Anyone have any ideas about this?
If you are comfortable with the price you are paying and not concerned about a potentially lower market value, then an appraisal is unnecessary (We've paid cash for condos and not bothered with appraisals). An inspection, however, is still a good idea.
I just sold my townhouse to a cash buyer. He was going to get an appraisal but then decided to waive it. I think that if you have been following the market for the area you are buying in, you know if you are paying a reasonable price, and why spend $400 to confirm that.
However, I agree with jghorton, I would definitely do an inspection.
We do pre-sale appraisals all the time, both for buyers and for sellers (just not both in the same transaction). It provides an expert opinion of value on the subject property. The more active the market, the more important it is to know how the value of the property is changing (up or down).
We enjoy doing cash sale appraisals because we can be brutally honest about the value to the property without the encumbrances of the multitude of federal guidelines which may apply if the appraisal was related to a mortgage-backed transaction.
The form used in the report is a General Purpose form, not the normal 1004UAD form, and the report is restricted use (single user, single use, not for mortgage transaction).
A presale appraisal can save you thousands (buyer) or get you thousands (seller). Why wouldn't you pay a few hundred dollars to know the value of the home?
A presale appraisal can save you thousands (buyer) or get you thousands (seller). Why wouldn't you pay a few hundred dollars to know the value of the home?
^^^^
This.
If you aren't sure about what the condo is worth, get an appraisal (and include an appraisal contingency). If you are confident about the value--due to your own research and that of your agent--you can skip the appraisal provided that you're okay with the price.
I recommend to my cash buyers that they put in the contract an appraisal contingency, in the event the sales price doesn't match the appraisal. As mentioned, buying as-is with cash is scarey enough and HOA lender questionnaire is a must too if the home is regulated by an association.
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