Should I Ever Waive The Appraisal Gap When Buying A Florida Home?
Purchasing a Florida home can sometimes be a highly complex endeavor, with so much depending on short-term supply and demand. One major part of a real estate purchase is the appraisal – after all, a purchase and sale agreement cannot usually be created without both potential parties being aware of the value of the property to begin with. However, sometimes, a property will be appraised for less than the price in the contract. This creates what is known as the ‘appraisal gap,’ and the question of how to handle it will differ from person to person.
A Way To “Lock In”
Waivers of appraisal contingencies usually happen in markets where more people are seeking to purchase real estate than there is real estate available – which has been Florida frequently in the past, and is likely to be this way again. In order to seal a purchase, a potential buyer may waive the ‘appraisal gap’ so a contract can be concluded more quickly and effectively, even if it may cost them some money to do so. In essence, the buyer is ‘locked in’ to the contract; if the seller wishes to bow out for another reason, they may be able to do so, but not due to the appraisal.
This may be acceptable to the buyer and seller, but one of the main reasons why waiving the appraisal gap can be a fraught decision is because a lender may reevaluate their offer to a potential buyer if the appraisal is too low. In addition, agreeing to waive the appraisal gap means that the buyer will be on the proverbial hook for the difference. This may not matter to some investors, but it can be ruinous to others.
What Is The Best Choice For You?
If you find yourself in this situation as a buyer, you have two real options if you decline to waive the gap: bow out of the running for the property, or try to convince the seller to renegotiate or even to have a second appraisal done. If you have genuine concerns about the legitimacy of the first appraisal, it may be worth it to call for a second. Many sellers, however, are not willing to renegotiate.
In the end, it may be worth it to simply withdraw an offer rather than to waive the appraisal contingency and wind up overpaying for a substandard property. While every situation is different, the right real estate attorney can help you wind up in the best legal position possible, with the best odds to conclude a contract in the way you wish.
Contact A Tampa Real Estate Attorney
Purchasing a property in Florida is not for the faint of heart. A Tampa real estate attorney from the Seward Law Office can help protect your interests during the negotiation process. Contact our office today at 813-252-6789 to schedule a consultation.
