Thank you Dorie Dillard CRS GRI ABR for your original blog.
What if the house doesn't appraise?
The spring market is in full swing in Texas! One thing we’re experiencing with fresh new listings coming on market and buyers out in full force are multiple offers. Pristine listings are seeing 5 - 8 offers and prices going way over list price in some communities. Remember many times it's all about a home in the perfect location.
In Texas we have a new tool in our arsenal: “Addendum Concerning Right to Terminate Due to Lender’s Appraisal” to include with an offer which clarifies the buyers position on what will happen if the home they make an offer doesn’t appraise. The Texas Real Estate Commission approved this Addendum in November 2018 to be used only with similarly approved or promulgated forms of contracts. These TREC forms are intended for use only by trained real estate license holders.
Using this Addendum is one way of easing the mind of the seller reviewing multiple offers. We have an addendum for everything so it’s not a surprise this Addendum covers appraisals that fall short of the agreed sales price. By understanding the addendum at time of offer the buyer knows their options on appraisal issues up front and are able to make a decision that suits their level of risk.
There are 5 options for buyers to handle an appraisal that comes in under contract price:
- Rebut the appraisal
- Apply more down payment to make up the appraisal shortfall
- Change financing to lower down payment to make up the appraisal shortfall
- Negotiate with the seller a price reduction
- Order a new appraisal
The Addendum makes it clear what the buyer is willing to do if the appraisal falls short and most sellers want to see this addendum with offers to insure they are not going to re-negotiate the price. Remember it's a seller's market in most areas of Texas. Resolving appraisal issues at contract time is a real plus. Everyone is on the same page and expectations are set with no surprises. All states are different so it pays to under stand the appraisal process in the state you live.
Selling or buying a home is a complex process and you want to work with a REALTOR that inderstands the process and can intrepret the documents you will be using. I have systems in place, references and am a good listener and communicator. Let's talk and schedule a time to see if we are a good match. Reach out to me at 512-750-6899 or email@example.com.