05-10-2010 12:45 AM
I know the appraisal addendum is often used for all cash offers. Should I used both appraisal addendum and the financing addendum at the same time with none cash offers. In other words, I'd like to have the option to waive the financing contingency but not waive the appraisal contingency.
05-10-2010 08:35 AM
I'm confused. Are you buying all cash or financed? What do you mean by "none cash offers"?
The appraisal and financing contingencies are waived in all cash deals because they don't apply. An all cash buyer could get the property appraised. One of the attractive features of all cash to a seller is the lack of contingencies which remove more situations where the transaction could fail.
Both contingencies can be included or just one. Both protect the buyer.
05-10-2010 08:54 AM
The appraisal addendum is basically taken directly from the financing addendum without the contingency of the financing. So, an all cash transaction that is not contingent upon the bank, can be contingent upon an appraisal ordered by the buyer.
As a seller, I would view this as pretty much the same thing as the financing addendum. If I was representing a seller and the 22AA (appraisal addendum) came in on one offer and a 22A (financing addendum) came in on a separate offer, one wouldn't win over the other. The other features of the offer would determine who has the better offer, not the fact that one is "cash with an appraisal addendum" versus one that as the normal financing contingency.
However, when you are not up against any other offers and are a buyer with cash, this addendum will protect you by getting an "unrelated" 3rd party to appraise the market value.
05-11-2010 11:27 AM
I thought that the appraisal add wil provide more protection when you put more than 20% down. Say you put 40% down, while the house appraised for 10% lower than purchase price. In this case, you still qualify for the loan. But you can ask the seller to lower the price or release you from the P&S agreement. Is this correct?
05-14-2010 09:50 AM
Yes, the appraisal addendum will protect you in the event that the appraisal comes in under the agreed purchase price. This is regardless of what you are putting down. If the appraisal price comes in below the agreed purchase price, the seller must either get a reappraisal or lower the purchase price. But, yes, it "protects" you in that respect.
Bottom line, though, is that I wouldn't be depending upon ANY appraisal when purchasing a home. Look at the comps. If you've been actively searching for properties you have probably been inside the comparables (or at least some) since you have been looking. What has sold within the last 30 days within 1/4 mile (note that I say "sold" and not "active") You should know what your money will buy and your agent should show you the comps that support the value that you have offered. If you are banking on an appraisal for some sort of peace of mind, you probably weren't prepared to make the offer that you did make.