Buyers are looking for ways to strengthen their offer in this competitive seller’s market.
One tactic that carries a lot of weight with sellers is waiving your appraisal contingency.
But not every buyer is able to use this method and should discuss if they are able to remove it with their real estate agent and lender before electing to move forward regardless of appraisal value.
This option of removing an appraisal contingency is most readily available if you're buying your home with cash. This is the perfect example of a house is worth whatever amount a buyer is willing to pay. But when there is a loan involved, buyers need to understand the risks of removing an appraisal contingency.
If the home does not appraise at the offer price, your lender will not approve the loan unless you pay the difference. Removing the contingency before the appraisal is taking a risk unless you are comfortable with paying more money upfront. Buyers should speak with their lenders to understand how much additional cash is needed to bring to the table if an appraisal contingency is removed.
If an appraisal contingency remains in a contract, that means the sale is contingent upon the buyer obtaining an appraisal of the Property. The appraisal will be at Buyer's expense and will be performed by a Maryland licensed appraiser. If the appraisal value comes in below the contract price, the buyer has the right to ask the seller to reduce the purchase price, but if you waive your appraisal contingency, the sale will move forward regardless of the appraisal value.
This is a popular approach for buyers because many properties are going into multiple offer situations and the contract price is being driven up considerably. When the buyer is willing to pay more, that doesn’t automatically mean that an appraiser will agree that the value is there, since appraisers only use sold comparables.