Waiving the Appraisal | Monday Minute

Right now in 2021, we are experiencing a very unique real estate market.  With limited inventory and a large pool of ready buyers, we are seeing homes fly off the market in a matter of days and escalating offers well above list price.  But what happens if the high offer price doesn’t appraise?  What then?This is the current dilemma that sellers are running into.  And if the buyer isn’t paying in cash, then the lender is going to require an appraisal.  And with some of these escalations, not all buyers have the additional funds available to to make up the difference in what it appraises for vs what was offered.One factor that has given our buyers a huge advantage over the competition is waiving the appraisal, up to a certain amount.  So instead of completely waiving the appraisal and possibly committing to a larger unknown dollar amount that you have to come up with, we have been waiving up to a certain amount over the appraised value.  This can be whatever amount that you are financially comfortable spending above the appraised value.  Often around $10,000 to $20,000For example. If we offered $525,000 on a $500,000 listing, with a waiver up to $10,000 over lower appraised value, and the appraisal came in at $510,000, then the new price would be $520,000 with the buyer bringing an extra $10,000 to the down payment.  This guarantees that the seller will net the highest possible price, and helps hedge against the lower appraisal.Now what if you don’t have extra cash available to make that appraisal waiver work?  Well, right now with interest rates being so low, you could always look at taking a slightly higher interest rate and getting the lender to credit you back  enough to cover the amount needed to make that appraisal waiver.It's a competitive market out there.  More than ever it matters about who you have representing you in your real estate transactions.  If you have any questions about how we can help you win offers and find your new home, give us a call.  We look forward to helping you!