Like many areas throughout the country, the Orange County Real Estate market is a strong seller’s market. As buyers compete for fewer listings for sale, they often find themselves in multiple offer situations with offer prices going over asking. In cases where buyers offer over asking price, I am seeing the majority of sellers request that buyers remove their appraisal contingency. So the question for any buyer is what exactly does this mean and should you agree to waive this contingency?
The short answer is that it depends. The reality is that with multiple offers on the table you are most likely up against someone who will agree to the seller’s request to waive the appraisal contingency so you may have very little choice . . . if you want to have your offer accepted. I had a buyer just this week with a very strong offer over asking who did not comply with the seller’s wish list and needless to say we are still looking.
So what does this mean if you are a buyer? First, if you are not a cash buyer, your lender will require a 3rd party appraisal that will indicate the home’s fair market value. The will base their loan approval on this value. So if you are buying a home for $400,000 with 20% down payment and it only appraises for $380,000, you will need to come up with $76,000 plus the extra $20,000 shortfall. So the longer answer is that if you have adequate funds available to cover any appraisal shortfall waiving an appraisal contingency can in fact be a way to make your offer stronger vs. the competition.
If you are looking to buy or sell a home in Orange County, CA, I would welcome the opportunity to work with you. I am the Broker Owner of Ventana Coastal Properties serving the needs of buyers, sellers, and investors throughout the Orange County area. I can be reached anytime at 949-500-0484 or via email at dave@ventanacoastalproperties.com.
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