In the current real estate market, homes are selling in a matter of hours, with multiple offers over list price. While this is great news if you’re selling, it can be tricky for the buyer. Knowing there will be multiple offers, buyers may feel desperate to offer significantly more than the asking price.
Efforts to persuade a seller to accept an offer may include waiving an inspection contingency. Under normal circumstances, this contingency allows a buyer to back out of a contract if the appraisal comes in low. However, without an inspection contingency, a buyer could be on the hook for a higher down payment if the appraisal is lower than expected.
Waiving this contingency depends on an individual buyer’s financial situation. A real estate professional will be able to review the buyer’s finances and help them understand the possible financial risk.
On the seller’s side, steps can be taken to avoid a low appraisal. Getting an appraisal before listing your home can help you set a realistic asking price. Making this information available to the buyer’s appraiser is also beneficial.