Do I Need An Appraisal Contingency

With the current state of the real estate market, you as a buyer, can be on the not so friendly end of the appraiser's opinion on the home you are trying to purchase.  So what are your options of an appraisal the misses the mark?  Will the lender still lend the money? Is the deal dead if the home does not appraise?

On every real estate transaction I put together when representing the buyer, I make sure we have an appraisal contingency in place.  What does it do?  The appraisal contingency makes the offer subject to the appraisal meaning that if the house does not appraise for the contract price then the lender won't lend the money and you can't buy the house. That wouldn't be a good thing.

In our Georgia Realtor contracts,  it allows for our appraisal contingency to have a certain amount of time to complete an appraisal.  I usually ask for a comfortable amount of time to have the appraisal ordered,  performed and then reviewed by the lender and their underwriters.   When asking for the time initially in negotiating a deal you need to allow for the negotiation time  as well as a few weeks afterward but before the closing date. So if we are going to close in 45 days then we would try to have the seller agree to a 30-40 day time period  for our appraisal.

With the lending regulations that have changed recently, lenders can't typically choose the appraiser and neither can you if you are financing the deal.  That appraiser is usually on the lender's approved list and only one will do your appraisal. The appraisal will be ordered by your lender so you don't have to make the call. 

Once the appraisal has been completed you will know really quickly if there is appraisal issues from your lender and here is where action is necessary on you as the buyer.  If the appraisal is very low there may be an impasse and the seller may never agree to reduce that low but it will depend on the seller's motivation as to whether additional negotiations are going to take place.

How Does The Appraisal Contingency Safegaurds You

1. Allowing your lender to order and obtain the appraisal within a time limit
2. Safeguarding your earnest money or deposit if the appraisal is low and you need to terminate
3. Allowing the seller time to match or renegotiate the contract on other terms in the deal
4.  Allowing the buyer the option to go with the lower appraisal and make up the difference with their cash
5. Finally, allowing the buyer to terminate the deal if seller is unwilling to match or renegotiate

West Atlanta Real Estate Experts

List! Buy! Sell!  This is not your ordinary Brokerage.  Unlike most real estate companies that force you to do things one way or their way, we believe you should have choices to pick and choose what best fits your individual needs.

We are always looking for new ways to make and West Atlanta real estate more efficient AND without sacrificing quality or service. If you’re looking to buy a home in West Atlanta or sell your existing West Atlanta property, we will be happy to take care of your real estate needs. Our mission is to provide outstanding customer service while utilizing the best practices and systems available.

For more information about West Atlanta Real Estate services and how we can best serve you, please fill out the online contact form or give us call today!

Chip Hurst
Maximum One Realty Greater Atlanta
770.294.9976 Mobile
Hurstch@bellsouth.net
www.WestAtlantaRealEstate.com