The housing market is so hot that buyers aren’t just waiving inspection, they’re waiving the appraisal. I’m Amy E. Feldman.
The shortage of homes for sale has led to an increase in bidding wars including for a house in Berkeley, California, where a home sold for a million dollars over the asking price. In addition to paying over asking, buyers are offering to waive inspection and to waive the appraisal contingency.
Here’s what you need to know before you do that: lenders require you to get an appraisal on the value of the home to ensure that it will cover the amount they’re lending if they have to foreclose, so most contracts have a contingency saying if the appraisal comes back too low and the lender won’t give you the money, you can get out of the contract and not lose your deposit. Lenders can agree to let you waive the appraisal—but they’ll only do that if it’s a conventional mortgage for a one-unit property. Talk to your lender before offering to waive the appraisal and to your financial adviser before you hand over an extra million dollars.