Some buyer’s agents are using a sneaky strategy in the market these days.

What’s the dirty little secret about appraisals that agents and homebuyers are hiding from sellers in the current market? It has to do with the appraisal contingency removal, and I’m here to discuss it today.

There are three key contingencies in every home contract: the inspection contingency, the appraisal contingency, and the loan contingency. In today’s competitive market, many buyers are now waiving their appraisal contingency to win a home. It works fine with an all-cash offer because you won’t get an appraisal anyway. If you have a lot of money down, an appraisal may not even be required.

“Buyers are using the inspection period to rush the appraisal along as quickly as possible.”

When agents and buyers waive the appraisal contingency, they’re taking all the risk on themselves. If the property doesn’t appraise for the price you agreed to pay, waiving the contingency means that you’re promising to cover the difference in cash. 

Here’s where agents and buyers get a little tricky. The inspection contingency has to be very short to be competitive in this market, anywhere from seven to 10 days. More and more buyers are using the inspection period to rush the appraisal along as quickly as possible. If they can get the appraiser out to the home during the option period and the property comes back at a different value, they can use that inspection contingency and cite almost any reason they want to back out of the contract. It’s a bit of a workaround that can give the buyer an out for any reason. 

It’s important to have a good agent on your side to negotiate the tightest timelines possible and knows what they’re looking at in an inspection report. If you have questions about contingencies or anything else related to real estate, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.