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Is there anything wrong with paying for an appraisal BEFORE submitting an offer?

I found a house I REALLY love, but I am worried that they are just asking too much for the house and I will get tied into an offer that won't be in line with the appraisal - and end up negotiating the difference.  I don't want to offend the sellers with a "low-ball" offer to the extent that they won't even entertain my offer, and I am thinking if I had the concrete opinion of an appraisal it would make my offer stronger. 
  • October 18 2010 - Bountiful
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Answers (10)

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Hello,

I don't know how Utah does it, but here in NM, if the property doesn't appraise three things can happen:  1) seller can lower price, 2) buyer can make up the difference outside of lending or 3) purchase agreement is null and void.  In other words, you have options.  Instead of getting an independent appraisal before making an offer, have your buyer's agent show you the comps for a reasonable price range.

 
  • October 18 2010
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Profile picture for blue screen exile
"That's why we have these amazing tools as Buyers Agents that we can perform at no cost to you.  We can pull the latest Data from the MLS and find out what the home you want to purchase's current value is in this market .  This is not an appraisal, it's a CMA." -

And those are the exact same tools that are used by the Listing agent to set the listing price!!!!

No two CMA's should be identical!   If they are, the people don't them aren't doing them but are relying on software that is worse than a Z-estimate!

Sure, get comps and CMA's to back up your offer, but don't expect a seller to cave in to cherry-picked numbers that substantially disagree with what the listing agent provided.

The market prices are still falling, and will fall some more when the interest rates rise, so there is no rush if an offer is declined.

As for an offer being able to be re-negotiated if the appraisal comes in low?  Only if you put an appraisal or funding contingency in the offer, which means it is no longer a "strong" offer, but becomes a weaker offer, which means it has a higher probability of being rejected outright, or having someone else offer $5k less and get the house instead of you.
  • December 01 2010
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You are gambling with a costly approach.  An appraisal can cost anywhere from 300-400 dollars. Ouchie.



However, I understand your thinking.  You don't want to dicker with the price?  You just want to pay what its worth, right?

That's why we have these amazing tools as Buyers Agents that we can perform at no cost to you.  We can pull the latest Data from the MLS and find out what the home you want to purchase's current value is in this market .  This is not an appraisal, it's a CMA.

 However an appraiser will use the same tools by pulling comparable properties from the MLS and compare sold homes.

A great tool every Agent uses prior to making an offer on home.

That will give you the cold hard facts to base your offer on.  You can feel confident and assured when you go in with your offer and you don't have to feel afraid that you are lowballing.

Best of luck!



 





  • December 01 2010
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Why don't you get a CMA from a few Realtors in the area  to give you an idea of the market price. Usually if you are getting a loan for the home it will be appraised by the lender. If if appraises lower than what you are offering then you have an out of the contract or offer them a lower price. The lender will usually not ask you to pay the appraisal. 
  • December 01 2010
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I agree with Alyce plus ill add what happens if your offer isn't accepted? Are you willing to threw that money away?
  • October 18 2010
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I don't know the Utah procedure, but in Colorado if the property does not appraise the seller can agree to lower the price (and if this happens, you have not
"offended the sellers with a low-ball offer," the buyer can make up the difference, the buyer can terminate the contract without loss of their earnest money.   I would not advise paying an appraiser before writing an offer.  Most lenders will need to get their own appraisal anyway and so you would be paying for it twice. I would go through the comparables with your buyer's agent and use that information.
  • October 18 2010
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Profile picture for kirk Glover
If you do decide to do an appraisal prior to offer, you might talk to your lender and see if you can do it through them to avoid having to do a second appraisal if you move forward. Also I would check with the lender and see how long the appraisal will be good for if you can use it for your Mortgage.

Good Luck!
  • October 18 2010
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As Alyce suggested, you do have these three options in Utah as well.  Working out the price up-front is the best policy because appraisals tend to float toward the purchase amount (at least that has been my experience in the past, perhaps that no longer is an issue). 

Your offer may offend the sellers, but being buffered by real estate agents on both sides helps minimize the offense.  Your agent could make a verbal offer and see if the seller's would even respond to an offer in that price range.  Submitting it with comps to explain your offer is another great strategy.

Best of luck!
  • October 18 2010
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Hi MovingBackUT.   Nothing wrong if the seller agrees - no guarantee that they will without a contract in hand because in Georgia at least the seller property disclosure statement asks if any reports or inspections have been performed on the property and the seller would need to disclose the appraisal which means the seller would be asked the appraised value.   Your buyer agent can write an offer for you that protects you from paying too much and then you can have the appraisal at the appropriate time.   If you do it before the contract, you'll pay for the second one that the lender requires anyway.  Good luck.
  • October 18 2010
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Absolutely nothing wrong except that you will need to pay for this service and the sellers may always question the appraisal, like they question many times CMA.
The sellers, in most cases, believe that their property is worth more than in reality is even if you support your offer with professional CMA or appraisal.
Good luck with your offer.
  • October 18 2010
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