Thursday, March 10, 2005

Buyers' Tip - Include Appraisal Contingency in Offer

I had a recent experience where my Buyers wrote an offer on a property which I suspected would not "appraise". Unfortunately I was right and the mortgage was declined. The offer included an appraisal contingency & the Buyer was able to cancel the contract.

Simply having a mortgage contingency in many cases will not protect a Buyer's deposit. In most cases the mortgage will be approved prior to the appraisal. To offset this potential risk the Buyer's agent should always include an appraisal addendum with your offer.

Most real estate agents now strongly recommend their buyers include in their written purchase offers, in addition to customary or required local inspections such as for termites (also called "pest control inspection"), radon, energy efficiency, building code compliance, and building permit disclosure, a contingency clause for the buyer's approval of a professional home inspection report. An additional contingency clause most home buyers include, out of necessity, is for a satisfactory mortgage appraisal for at least the amount of the sales price.

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