A buyer waiving the appraisal contingency is occasionally seen, but what about waiving it as a seller? Opinionated sellers are out there, but how many are willing to actually put their confidence to the test and sell the home if it appraises for less than the contract price? We’ve touched on the strategy of buyer’s waiving the appraisal contingency in a very competitive market, what happens when the tables are turned? We know as we’ve had this happen. Three times in the last three months sellers of ours have been presented with this request. Twice this followed “lines in the sand” being drawn by each party. Each of these homes was located in active and desirable area; both had offers within a week and both were close to list. The back and forth lasted a while and while they acquiesced on price, stipulations were included that prevented any negotiation in the event of a lower than contract price appraisal. In a sense, they were calling the sellers out. What has to be considered when this happens?

• Are legitimate closed comparable sales available for use? Of course this assumes an understanding of the appraisal process and of what constitutes a comparable.
• Is the home actually “worth it”?
• Are the seller and agent acting on the data and not on emotion?
• Are the seller and agent prepared to lose?
• The appraisal is based on the contract price. If closing costs are built in, that additional money may break the camel’s back.
• Is the buyer’s agent leading you into a trap?
• Does the agent have a strategy to meet the appraiser and share the data in a way that doesn’t constitute “undue influence”?

The seller is naturally going to seek the counsel of their agent if put in this position, the agent better be ready to respond in a manner that best meets the situation. That may be a candid – “no, the home won’t likely appraise”. Don’t ever forget, you can be “right” and still be wrong; all the supportive, legitimate data may be present and the appraisal still not come in. Appraisals are opinions and since the crash, there has been an influx of rookies as many experienced ones leave the business.

Some buyers are calling out sellers, writing in appraisal waivers. Essentially telling them to go “all in” We have written offers for buyers asking the sellers to waive the appraisal contingency. This is a potential tool in the box of a skilled buyer’s agent so understand that it is possible the seller is being set up to fail. We have successfully used this very tactic twice this year with sellers that let ego and arrogance get in the way of obvious data. Their agents failed them as well as they enabled the expected and excusable seller ego to be lost in their own. “Excuse me, but this is “Happyville”, one of the best areas in Atlanta. Here we yada yada yada….I’ve been selling here for 30 years and blah blah blah blah”. Opinionated sellers, especially in active markets, are nothing new. Experienced agents understand that and act a counsel as much as advocates; it’s ok to tell a client no or advise them to take a different course of action. An agent that lets their ego cloud their vision is not a professional.

We ended up waiving the contingency on the above examples as I was confident that I had strong enough data to make the case; appraising for close to 25 years has made me completely data centric anyway. I met the appraiser at both of the listings, gave them information packets, lists of upgrades and amenities in each home and answered any questions. Both went through fine and both deals have closed. The third terminated shortly after contract as the buyer ended up finding a home closer to family.

Now is the time to think outside of the box. Agents must keep current, stay engaged and keep their clients up to speed with all of the changes in the real estate business. With the abundance of data (much of it inaccurate and misleading) every one can easily think they “know it all” – a good agent keeps things in context. 

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Hank Miller, SRA
Associate Broker & Certified Appraiser
Atlanta Communities Real Estate
678-428-8276
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www.hmtatlanta.com