Whether you’re in the market for residential or commercial property, securing an appraisal is essential to securing financing from your lender. After all, a lender is unlikely to loan you more money than what a property is worth.
The problem with appraisals is that they are usually performed after you’ve already signed a purchase agreement. Does this mean you’re locked into buying the property for the price stated in the purchase agreement?
What does the contract say?
As with any legal transaction, the first place to turn to when determining your options is the purchase agreement contract. Most real estate contracts contain certain contingencies. Contingencies may mention things such as a sale being dependent on a home inspection. Many contracts may contain a contingency based on a home’s appraised value. If so, you can probably renegotiate the asking price, or you may be able to walk away if you so choose. If the purchase agreement is silent regarding an appraisal, all hope is not necessarily lost.
Renegotiating with the seller
The seller is selling for a reason. They likely don’t want the contract to fall through and to have to start over again from square one. Therefore, a seller may be willing to renegotiate even if the purchase agreement doesn’t contain an appraisal contingency. However, remember that the seller has no obligation to accept a lower price in this type of situation. They could still stick to the terms of the contract, and you could be on the hook for any penalties associated with canceling the contract.
Any real estate purchase is a significant investment. You should always work closely with a professional. You will want to ensure that your interests remain protected throughout this process.
