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Answers (10)
- sanlinc
- Contributions:4
Thank you for all your wonderful input, it has been very helpful. Here is my counter offer, "if the property does not appraise for my offer price, purchaser will pay the appraised price, plus $5000 up to my offer price". I have checked comparables in the area for the past year and nothing has sold for my offer price. The ,property is unique, so it is hard to find a good comparable. Also in the sellers counter offer it states that there is a chance that the sale will be a normal sale and not a short sale, so I'm guessing the offers that the seller has received are very close to what they owe.
Another question I have, I may go for conventional as I do have cash to put down, but I would also like to consider FHA. If I am willing to pay $5000 over appraised price would I still be eligible for an FHA? I live in California.
Another question I have, I may go for conventional as I do have cash to put down, but I would also like to consider FHA. If I am willing to pay $5000 over appraised price would I still be eligible for an FHA? I live in California.
- Cheryl Barbagallo, "CBrealestateproperty"
- Contributions:70
Don't pay over appraised value. That is how the housing market got in this mess originally a few years ago.
- Ryan Cook, "ryancookrealtor"
- Contributions:153
sanlinc - Paying above appraisal is not a good idea. @sunnyview is absolutely correct. You can't go back and change your original offer, but for future protection your offer should always include the phrase, "Property must appraise at or above offer price."
I'm not sure how real estate contracts work in your state (do you make an Offer to Purchase and then work through contingencies towards a binding contract or do you go straight to contract), but if you're not paying cash there should be contingency protection for you within the contract that the property has to appraise or your lender won't lend...at which point you could walk away with your deposit.
You have to decide how badly you want this home. If it's the home you absolutely must have, then you may have some difficult questions to ask yourself. If you're OK walking away, then call the bank's bluff and live to fight another day.
You have no idea what the other offers are...and I don't know if your state requires the listing agent to sign a letter confirming there are multiple offers (my state, Massachusetts, does not and I've run into dishonest agents that state there are multiple offers when there aren't just to drive up the price...my advice on that is to ask the admin or ask the agent to put that in writing).
Set a price you're comfortable paying and stick to that plan. Don't get wrapped up in the emotion, which is what sellers are banking on. You can offer other terms besides money as a counter - maybe you'll close sooner, maybe you'll put more money down at contract (we call that Purchase & Sale, or P&S, in MA), maybe you'll pay a higher price but expect closing costs to be paid for. There are a lot of terms within a contract to play with. Just keep the following phrase in mind, "I'll be willing to fill_in_the_blank IFF I can have fill_in_the_blank."
Good luck...and if you have additional questions, post it back on this thread and folks here will be happy to chime in.
Ryan
I'm not sure how real estate contracts work in your state (do you make an Offer to Purchase and then work through contingencies towards a binding contract or do you go straight to contract), but if you're not paying cash there should be contingency protection for you within the contract that the property has to appraise or your lender won't lend...at which point you could walk away with your deposit.
You have to decide how badly you want this home. If it's the home you absolutely must have, then you may have some difficult questions to ask yourself. If you're OK walking away, then call the bank's bluff and live to fight another day.
You have no idea what the other offers are...and I don't know if your state requires the listing agent to sign a letter confirming there are multiple offers (my state, Massachusetts, does not and I've run into dishonest agents that state there are multiple offers when there aren't just to drive up the price...my advice on that is to ask the admin or ask the agent to put that in writing).
Set a price you're comfortable paying and stick to that plan. Don't get wrapped up in the emotion, which is what sellers are banking on. You can offer other terms besides money as a counter - maybe you'll close sooner, maybe you'll put more money down at contract (we call that Purchase & Sale, or P&S, in MA), maybe you'll pay a higher price but expect closing costs to be paid for. There are a lot of terms within a contract to play with. Just keep the following phrase in mind, "I'll be willing to fill_in_the_blank IFF I can have fill_in_the_blank."
Good luck...and if you have additional questions, post it back on this thread and folks here will be happy to chime in.
Ryan
- Angela Hardy, "AngelaHardy"
- Contributions:339
I would never advise a client to pay above the appraisal value. There are a lot of homes on the market. I know that purchasing a home is an emotional experience for most buyers - but keep tabs on the voice of reason as well. Why would you want to be underwater on your home from day 1? Keep looking and find one that you love- and that is a good financial decision too!
- shasta_steve
- Contributions:448
I know I take my shots at realtors on here but I think Valerie gave you good advice. It is actually a very common clause around here anyway. Just make sure you have a financing contingency in your offer and you should be just fine. Your only problem may be if someone else is offering cash they may decide to take that offer even if it is a little lower.
I know when I bought my last house, a foreclosure, I had the same thing. I did have a problem with my loan and had to redo some things. My problem was I had to redo the apprasial too and that took more time. The bank was pushing hard to get me to sign away the contingency. I was sure the house would appraise but I was not going to gamble my deposit on it. I will give my agent props for playing enough games to buy me some time, so we got it done, and there were no problems.
I know when I bought my last house, a foreclosure, I had the same thing. I did have a problem with my loan and had to redo some things. My problem was I had to redo the apprasial too and that took more time. The bank was pushing hard to get me to sign away the contingency. I was sure the house would appraise but I was not going to gamble my deposit on it. I will give my agent props for playing enough games to buy me some time, so we got it done, and there were no problems.
- Valerie Pressley, "SJ Realtor"
- Contributions:8
Are you getting a mortgage or paying cash? If you are getting a mortgage, your mortgage company is going to do an appraisal on the property. They will lend you money based on the appraisal price and WILL NOT LEND YOU MORE. If you are getting an FHA mortgage, one of the documents you will sign is the FHA Amendatory Clause, which says that if the property doesn't appraise, you don't have to buy the house. If you are getting a conventional loan, there is no such protection. Don't believe this hooey. Sounds like they're bluffing. The bank would never force someone to pay more than the appraised value for a property. Call their bluff and back away.
- sunnyview
- Contributions:25139
I think it is a bad idea to pay over the appraisal amount. That puts you underwater the day your close escrow. If the market in your area is slipping a little bit, you could structure the counter offer so that you are willing to offer X, but agree to pay whatever the appraisal comes back at higher or lower. Check with your agent about the comps first so you understand the risk you might be talking with that offer.
It sounds like the owner is playing games. They may have underpriced the house to get offers, but may not have bank approval at that price, but don't make that your problem as a buyer.
It sounds like the owner is playing games. They may have underpriced the house to get offers, but may not have bank approval at that price, but don't make that your problem as a buyer.
- sanlinc
- Contributions:4
Sorry for duplicate response. Thank for your speedy response. I'm really starting to think the same as you. I really like the house, but am not comfortable in offering way over the appraisal. I think I will tell them that I will pay appraisal price. Is there anything I could add to this just to keep me in the running?
- sanlinc
- Contributions:4
Thank for your speedy response. I'm really starting to think the same as you. I really like the house, but am not comfortable in offering way over the appraisal. I think I will tell them that I will pay appraisal price. Is there anything I could add to this just to keep me in the running?
- wetdawgs
- Contributions:26854
Personally, I'd run as fast as I can in the opposite direction. I wouldn't be surprised if they are bluffing. Paying above appraised value is getting back in the trap that pushed housing prices to unrealistic levels.
multiple counter offers on short sale
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