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Contributor
Seasons
Posts: 21
Registered: ‎02-13-2013
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Appraisal contingency to put or not to put is the question!

As a first time home buyer it makes me really nervous when I am asked to waive the appraisal contingency. How can I even start to estimate how the house will or will boot get appraised? 

Does everyone really waive that Few hike bidding for an offer? like I said I feel pretty nervous in doing so and haven't been able to waive it in any of the offers.

 

any advice?

Contributor
Ptowner
Posts: 38
Registered: ‎06-27-2012
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Re: Appraisal contingency to put or not to put is the question!

I will waive it if I have enough cash when the bank can only loan to the apraisal value. It's how much you think the house worth, not the appraisal. Offer whatever you think is comfortable and willing to buy it no matter how much the appraisal value comes back.

Gold Regular Contributor
sheriff
Posts: 2,389
Registered: ‎06-01-2012
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Re: Appraisal contingency to put or not to put is the question!

[ Edited ]

First understand why they are asking you to waive the contingency.  One reason is to write a cleaner offer in a very competitive market so you will have a better chance to get the offer accepted.  The other one is because the appraisal will probably come in lower than your offer.  The reason is appraisers use comparable homes in the neighborhood to figure the value of the home.

 

Since the comparables are lagging in a rapidly rising market you will have to come up with additional funds to get the loan you want.  Keep that in mind.  You can use redfin the find comps.  Then compare the individual aspects like REO, short sales, regular sales, condition of the home to get a value.

Contributor
redsoxfan
Posts: 42
Registered: ‎04-11-2012
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Re: Appraisal contingency to put or not to put is the question!

Super Contributor
Curmudgeon
Posts: 265
Registered: ‎06-14-2012
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Re: Appraisal contingency to put or not to put is the question!

I would be nervous too.  That said, I've seen some really nutty appraisals in the last few years; there seems to be no real quality control on appraisers (other than lenders doing a second appraisal and insisting on the lowest of the two).  If I were selling, I wouldn't want to get jerked around by an appraisal that came in too low.

 

You definitely want to take the time to get a really good feel for the value and what things are selling for in the area.  One big limitation of appraisers is that they normally don't have a chance to see the inside of the comps they use, so their adjustments for condition and quality of construction are often WAGs.  If you have been touring houses in an area on a regular basis, you may have a better picture.  Out of three appraisals I've looked at closely in the past year, I would say that two of them were off by more than 20% because the appraiser chose bad comps and/or adjusted incorrectly. 

Regular Visitor
Bobby101
Posts: 5
Registered: ‎02-21-2013
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Re: Appraisal contingency to put or not to put is the question!

[ Edited ]

Same situation here. Put couple of offers and almost all of them seller agent wanted to remove the appraisal contingency. I was afraid as I think main reason they asking to do so as they know for sure appraisal will come lower. Mean listing prices are already high and they want $50k on top of that without appraisal contingency. Wish I had google job.

Platinum Trusted Contributor
elt1
Posts: 5,115
Registered: ‎01-04-2010

Re: Appraisal contingency to put or not to put is the question!

In a rising market appraisals will come out low...they are using 3-6 month old info.... Appraisers now think of themselves as price police...the only beneficiaries are the cash buyers.. The 20% down people are being screwed.

Gold Contributor
mediaguru
Posts: 1,907
Registered: ‎03-03-2011

Re: Appraisal contingency to put or not to put is the question!

OR the 20% down buyers (and their prospective lenders) are being saved from major problems...

 

Think about it.  If banks truly believed the prices were going to continue going up, they would LOVE to have this asset on their books.

 

The fact that they believe the "low appraisals" and are scared to be the bag-holders on these properties speaks volumes...

Gold Super Contributor
Jil
Posts: 3,172
Registered: ‎10-24-2011
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Re: Appraisal contingency to put or not to put is the question!

[ Edited ]

mediaguru wrote:

 If banks truly believed the prices were going to continue going up, they would LOVE to have this asset on their books.


Wrong assumption, they do not care - with current lending policy. 

 

If your argument is valid, the 20% LTV gets higher priority and bank would have loved to lend this person, but they denied.

http://forums.redfin.com/t5/Mortgages/Lenders-for-Non-Resident-Aliens/td-p/396689

 

They do not differentiate between 60% LTV and 1% LTV as Fannie Mae does not give any weightage!

 

https://www.fanniemae.com/content/pricing/llpa-matrix.pdf

https://www.fanniemae.com/content/pricing/llpa-matrix-refi-plus.pdf

 

Banks leave the risk to buyers or to the underwriters or to the government! 

 

It does not mean I support or encourage removing contingency.  As a buyer I wanted to have as much as contingency to safeguard my EMD! I walked out the deal when they wanted $50k over the appraisal value!

 

Buyers must understand the risk before removing Appraisal Contingency! :smileyfrustrated:

 

 

Silver Trusted Contributor
Michelle1x
Posts: 1,063
Registered: ‎02-17-2008
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Re: Appraisal contingency to put or not to put is the question!

[ Edited ]

mediaguru wrote:

OR the 20% down buyers (and their prospective lenders) are being saved from major problems...

 

Think about it.  If banks truly believed the prices were going to continue going up, they would LOVE to have this asset on their books.

 

The fact that they believe the "low appraisals" and are scared to be the bag-holders on these properties speaks volumes...


I'm convinced this is happening- I am not in the market for a house right now but starting about 6 mos ago my old wells loan officer started calling relentlessly to refi.   He even had this group of assistants calling the old wells mortgage holders from years ago.   Wells didn't want that refi business in 2010.