Jul 15 2018 37430 1

Dated: 07/15/2018

Views: 69

Do You Need An Appraisal Contingency?

Posted byTeam H&L Miami @Real Estate Empireon7/15/2018

Once you have signed the purchase and sales agreement, the property will be appraised by a licensed appraiser. The home appraisal is an estimate of what the property is valued at. The appraisal takes into account a number of factors such as the location of the home, the condition of the house, and recent sales of like homes in the area. The value that is determined by the appraiser is the maximum amount that can be loaned out by a mortgage company.


If you’re buying a $300,000 home, but the appraisal comes back at $297,000, you’ll need to pay the remaining $3,000 out of pocket in addition to the down payment and the closing costs that are paid up front at the time of purchase.


If the appraisal comes in too low, you might not have the necessary funds in your bank account to actually make the purchase of the home. Since you have already signed the purchase and sales agreement, you have signed a legally binding contract that states that you will in fact buy the home from the seller. If you break the agreement, you’ll lose your deposit, which could be a significant sum of money.  



The Appraisal Contingency


Most purchase agreements contain something called an appraisal contingency. This is an out for the buyer in the case of a low appraisal. If the appraisal is less than the agreed upon price, there’s a way for you as a buyer to get out of the contract without it taking a hit on your finances. You need this contingency to protect you.  


Is Waiving The Appraisal Contingency Is A Good Idea? 


You could be in a situation where you might consider waiving the appraisal contingency. This would be a case where you agree to pay the entire amount of the contact price, even in the event of a low appraisal. This gives the seller a clear message that you want the home no matter what. The only way that you should even really consider doing this is if there is a lot of competition for the home that you want to purchase. If an appraisal comes back much lower than expected, you’ll be expected to make up the difference in price. In most cases, it’s a good idea to keep the appraisal contingency in the agreement to protect yourself as a buyer.


How To Know For Sure


This is why it’s so important to hire a real estate agent. In many states, agents are able to give you advice on the best course of action for buying a home. You can also hire your own attorney to help you through the legal portions of the home buying process. In other states, attorneys are required for the sale of a home. These lawyers will be able to advise you as a buyer what’s in your best interest. Your attorney is there to protect you!

Blog author image

Team H and L Miami

Team H&L Miami @ Real Estate Empire Group is a fast growing boutique Real Estate firm established in 2001. It began to revolutionize property sales as well as marketing through brokers, agents, and an....

Latest Blog Posts

Aug 13 2018 37430 1

All About Comparative Market Analysis Reports Posted byTeam H&L Miami @Real Estate Empireon8/12/2018Comparative market analysis is a tool that helps sellers to know about how much their home is

Read More

Aug 6 2018 37430 1

Home Maintenance: 5 Quick Exterior FixesPosted on Jul 30 2018 - 2:12pm by Housecall 116 By Rachael Baihn It can be easy for the exterior of your home to look

Read More

Aug 4 2018 37430 1

9 Ways to Disaster-Proof Your Home Against Summer Storms Turns out a tidy yard and clean gutters do way more than just look nice. Image: Jodi Jacobson/Getty SHARE THIS Email This Pin This Tweet

Read More

Aug 3 2018 37430 1

Reduce the Time It Takes to Find Your Dream Home Posted byTeam H&L Miami @Real Estate Empireon7/30/2018For those who want to conduct a successful home search, it is important to plan ahead as much

Read More