Here’s why some buyers’ promises aren’t worth their salt in this market.
Does removing the appraisal contingency help get your offers accepted?
The trend in this crazy real estate market we are in is for a buyer’s agent to submit an offer stating if the home does not appraise, the buyers don’t care and will pay the extra money to cover the difference if required by the lender. That they will not use the low value to back out or ask the seller to reduce the purchase price. For example, they write an offer for $900,000 and the appraised value comes back at $825,000. They state that the buyers will still purchase the home for $900,000 and come in with the extra $75,000 cash to make up the difference.
So, does this actually help get your offers accepted? This is not a usual practice. In fact, this is the only time I can remember in my entire career this has become common practice.
The answer is yes and no.
As an experienced listing agent – when buyer’s agents remove the appraisal contingency, it doesn’t really mean much at all. Most of the time the buyers and their agents will still try to get the priced reduced to the appraised value. If the sellers don’t agree, the buyers can still cancel without any penalty even though they stated in the contract the home will be purchased regardless of appraised value. (The purchase contracts completely favor the buyer and they can cancel anytime within their inspection/contingency period for any reason whatsoever). It may look good on paper, but in reality, the buyers can still cancel or ask for a price reduction.
Now to a part time agent (which there a ton) or an agent that is not experienced, the removal of the appraisal contingency appears to be wonderful. They listed the house at $800,000, accepted an offer at $900,000 thinking “who cares if it comes in low they are buying it anyway”, not knowing the buyers will most likely try to re-negotiate the price to the appraised value and if they don’t get the reduction – cancel.
It takes an experienced agent to navigate this market.
So if you want to know how I still don’t find it hard to get my offers accepted or how my listings sell for so much more money than the competition – give me a call.