There are a couple of reasons. 1st, to ensure that the purchase price appraises early and not wait until the last minute and the deal falls apart. 2nd, to move things along so that all things are in place for the loan conditions deadline. 3rd, the agent may have advised him to move things along quickly. On a 30 day closing it really is a good idea to get things taken care of early in the process. The inspection should be done asap and there is no reason not to do the appraisal immediately after inspection resolution. 3rd, some sellers want to feel that they have a certain amount of control in the process and also feel that when the buyer pays $450.00 for an appraisal it locks them in a little further having more 'skin in the game'. Finally, if you want this home there is no reason not to go along with this request. This is not the hill you want to die on.
Robert McGuire ASR
Your Castle Real Estate
Direct - 303-669-1246
Paragraph 6.2.2 6.2.2. FHA. It is expressly agreed that, notwithstanding any other provisions of this Contract, the Purchaser (Buyer) shall not be obligated to complete the purchase of the Property described herein or to incur any penalty by forfeiture of Earnest Money deposits or otherwise unless the Purchaser (Buyer) has been given in accordance with HUD/FHA or VA requirements a written statement issued by the Federal Housing Commissioner, Department of Veterans Affairs, or a Direct Endorsement lender, setting forth the appraised value of the Property of not less than $______________. The 218 Purchaser (Buyer) shall have the privilege and option of proceeding with the consummation of this Contract without regard to the amount of the appraised valuation. The appraised valuation is arrived at to determine the maximum mortgage the Department of Housing and Urban Development will insure. HUD does not warrant the value nor the condition of the Property. The Purchaser (Buyer) should satisfy himself/herself that the price and condition of the Property are acceptable.
Basically, you do not have to pay any more than the appraised value or you get your earnest money back regardless of appraisal dates in the contract.
Hopefully you have looked at recent sold comparable properties and are comfortable with value as you don't want to go spending $300-400 on an inspection if the value is not there. I have actually asked the seller to pay for an appraisal before the inspection deadline and that the seller would receive a credit back from the lender at closing if the property came in at value. This has happened twice this year with clients.
Hope these things help!
Paul Mooney 303-810-7280 direct http://www.paulsdenverhomes.com
The price, terms, and contingencies are all part of the contract. So if the parties do not agree to all parts then there is no contract.
The reason, as Stuart stated, is the seller wants to know that the buyer is going to perform sooner than later.
With the low interest rates lenders are bogged down and so are appraisers. I'm seeing appraisals take up to 15 to 17 days now. Having a tight time line will push the buyer's lender and the buyer to do what they need to do.
Have an amazing day!
Similar question on Trulia: http://www.trulia.com/voices/Agent2Agent/Low_appraisal_issue
Read this NAR article to shed some light: http://rismedia.com/2012-07-05/strong-independent-appraisal-
You can ask for the appraisal be be done in 15 days but no one can ensure it will be done in that time frame. Who do you call?