Appraisal Contingencies A Thing Of The Past

Why Appraisal Contingencies Are a No Go in Today’s Market

With the housing inventory at an all time low after so many years of real estate market mayhem, it’s a sellers market with multiple offers coming in on every obviously available piece of real estate; the great news is that smart real estate investors today can take advantage of systems to find motivated sellers that no one else knows about.

But I digress…

One significant result of this new market is that sellers are beginning to request that buyers procure offers without appraisal contingencies. What that means is that any good faith money, or deposit, would have to cover the difference between the appraised value of the property and the offer, should the appraisal come in lower than expected.

“It is becoming more and more common as the shortage of inventory and the increase in buyer demand has continued through the spring and buying season,” said Maria Peña-Morales, owner of Team Q of Re/Max Ranch & Beach. Peña-Morales also said that she thinks this trend will continue until the market inventory situation improves.

While that may seem like risky business for first time home buyers or buyers with limited funding, it makes sense in the real estate investment game and, in fact, is even an advantage in terms of acquisition; especially if real estate investors are in the business of reverse wholesaling.

Real estate investors are generally dealing with cash buyers or private lenders;  savvy investors have built up a solid client base and have systems in place for finding cash buyers or private lenders, so that when they do go out there and find properties with motivated sellers, they are able to facilitate a seamless deal.

Than Merril, of Fortune Builders, said, “Don’t Allow Appraisal Contingencies. You might want to include them when making offers to buy homes, but don’t allow them when you sell – that’s so 2001”. [Sourced from]

He’s right. In 2013, there are so many real estate investment advantages that give you that competitive edge; the bottom line is, you just don’t have to.

About Kent Clothier

Kent Clothier is President and CEO of Real Estate Worldwide (REWW), a highly sought-after speaker, the owner of three multi-million dollar a year Internet marketed brands, and proud husband and father. Kent is motivated by his love of family and freedom, creating products that enable people to live their lives the way they choose.

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