topic Re: Bank wants to remove appraisal contingency in Mortgage Loans

Bank wants to remove appraisal contingency

ArmyStrong — Wed, 06 Jan 2010 18:42:23 GMT

Has anyone ever heard of a bank owned property asking for the appraisal contigency to be taken out of the contract? Sounded kind of ridiculous to us. Our contract read that if the house appraises for less than purchase price, I have the right to REQUEST within 25 days, that the seller reduce the sales price to a price not less than the appraisal price. That isn't binding them to anything. Wonder why in the world would they want that taken out. Based on the comparables in the area, I'm confident that it will appraise for more, but I guess you never know. If it does come in lower, we're concerned that the bank may try to keep the earnest money if we back out.

Re: Bank wants to remove appraisal contingency

Anonymous — Wed, 06 Jan 2010 19:58:49 GMT

there is no real need for an apprasal clause as long as you have a financing one. If it does not appraise for sale price, then you can not get financing and you can walk away. They probably do nto lie the wording of the clause and the clause is unnecessary so they want it removed. People with too many clauses tend to be people looking for an out and if it is a REO the bank does not want hassles, they want a quick sale. Thet would probably rather take an offer that is a few grand lower but has less stipulations. But they will entertain your offer if they can lower the stipulations. That is my guess.

Re: Bank wants to remove appraisal contingency

ArmyStrong — Thu, 07 Jan 2010 05:15:39 GMT

From what I understand (my new favorite phrase, btw), if it doesn't appraise for sale price, the buyer would just have to pay the difference or try to get out of it. My agent is worried that they may try to keep the earnest money if I backed out due to low appraisal, but it should be ok based on comps in the area. It ~~would~~ could be a $1,500 risk that in my zeal, and faith, I'd be willing to take, I think. What we are going to due is counter with either lowering the earnest money, or adding a clause like I'd pay up to $1,500 over appraisal or current offer, whichever is greater.

Re: Bank wants to remove appraisal contingency

Anonymous — Thu, 07 Jan 2010 13:47:33 GMT

@Anonymous wrote:
there is no real need for an apprasal clause as long as you have a financing one. If it does not appraise for sale price, then you can not get financing and you can walk away. They probably do nto lie the wording of the clause and the clause is unnecessary so they want it removed. People with too many clauses tend to be people looking for an out and if it is a REO the bank does not want hassles, they want a quick sale. Thet would probably rather take an offer that is a few grand lower but has less stipulations. But they will entertain your offer if they can lower the stipulations. That is my guess.

Keep it simple. The financing contingency is adequate.

Re: Bank wants to remove appraisal contingency

hawkeye33 — Thu, 07 Jan 2010 22:30:32 GMT

So back to mickie's point, does your contract actually have a financing contingency? I assume (and hope) it does. Mickie is right that that contingency, which basically states that you are not bound to the contract if you are unable to secure financing by a specified date, should be sufficient because no lender is going to finance you at the sale price if the house appraises low. The financing contingency protects you from being bound by the contract if you cannot obtain financing for the purchase. If the appraisal comes in lower than the contract price, I believe you can request financing from the lender for a lesser amount and pay the difference yourself. At that point, or when the appraisal comes in at or above the contract price, you would simply submit a form to the seller releasing the financing contingency.

I would guess they're wanting to keep the contract clean and minimal. The bank has to know that if the home doesn't appraise for at least the contract price, they're going to have to come down or figure something else out.

Re: Bank wants to remove appraisal contingency

Anonymous — Thu, 07 Jan 2010 22:56:17 GMT

Did bank say why it wanted apprasial contingency removed?

Re: Bank wants to remove appraisal contingency

ArmyStrong — Fri, 08 Jan 2010 05:02:12 GMT

No, they didn't. Even the selling agent is supposedly mystified.

Re: Bank wants to remove appraisal contingency

ArmyStrong — Wed, 13 Jan 2010 04:25:20 GMT

So now, bank didn't counter, they just rejected my offer entirely!!! The listing agent called this morning and told my agent that they put the listing back up, for the same original price! I had to scramble and have my agent submit the same offer w/o the appraisal contingency. And now I'm waiting again. This process Sux.

Re: Bank wants to remove appraisal contingency

Jazzzy — Wed, 13 Jan 2010 04:31:02 GMT

Hang in there...we've all got our fingers crossed for you!

Re: Bank wants to remove appraisal contingency

ArmyStrong — Wed, 13 Jan 2010 05:21:26 GMT

Truly appreciated! I needed that. Thanks!

Re: Bank wants to remove appraisal contingency

ArmyStrong — Wed, 20 Jan 2010 05:19:25 GMT

My agent called me this morning to tell me that the bank has accepted another offer. (My "new" bid was for the banks initial counter-offer, minus the appraisal contingency.) She told me last week that one more offer was on the table in addition to my "new" one. She says they are "dumbfounded", as the listing agent confided to her that my offer was higher (although a bit less in asking closing costs) and she believed that the banks always go for their "bottom line". She called after speaking to listing agent this evening to say that the other agent had not contacted her yet. She thinks that may be because there may be a problem with that bidder's financing or something, so hope is still alive, if ever so slightly.

Re: Bank wants to remove appraisal contingency

Jazzzy — Wed, 20 Jan 2010 14:35:27 GMT

Hang in there...

While I do believe banks often go for their highest bottom line...I also think the fewer hoops there are to jump through has appeal to them. Ease of financing and number of contingencies definitely has a place in the decision.

Keep us posted.

Re: Bank wants to remove appraisal contingency

ArmyStrong — Thu, 21 Jan 2010 20:13:44 GMT

Will do, thanks.

Re: Bank wants to remove appraisal contingency

ArmyStrong — Sun, 24 Jan 2010 13:48:18 GMT

Okay. Lost this one too. Maybe like LynetteM says, there were fewer hoops to jump through with the other offer. Perhaps it was a cash offer. Still seems kinda shady, somewhere along the lines if you ask me; but I'm over it now (lie). I've moved on physically if not mentally. Ready to jump back in (more lies). Just kidding! I have moved on. That was a tough lesson learned though.