Appraisers do not go into an inspection with the desire to mess up a sale or invalidate your financing approval. They simply go in independently and try to determine if the home is worth what you are paying for it. Sometimes, appraisers simply cannot justify a purchase value and have to input the fair market value. Now keep inmind that nothing prevents you from paying over an appraised value - that choice is up to you. However, your loan will be based on the loan-to-value of the appraised value - not the purchase price. That could cause you to need mortgage insurance even though you would be putting over 20% down on the deal.
However, I would suggest that you don't just go ahead and order your own appraisal. The banks may not accept it. You need a contract, loan approval and payment through the bank to have that appraisal honored.
Yes, just get the loan approved, get a contract and split the cost. The seller has nothing to lose and everything to gain if the sale goes through.
Bank of America Home Loans
Hope that helps!
Chris & Erin Ratay
Work. Play. Live.
If you already have a signed "Contract To Buy & Sell Real Estate" with the seller, your broker would have more than likely made contract contingent upon an acceptable property appraisal. If "Appraisal Deadline" and "Appraisal Objection Deadline" dates are filled in on the date table of the contract, then the seller has already agreed to let you do one, and can't deny it.
In this market it is very tough to avoid having an appraisal done. You obviously are putting a good amount of money down but the loan product itself might simply require one.
If you are going Conventional in your financing there is an option for what is called an "Appraisal Waiver." These historically have been allowed for high credit borrowers with at least 20% down. However, with the market being what it is, the lender could need an appraisal to verify that the loan does not require Mortgage Insurance. An FHA loan would always require an appraisal.
I am going to check with our in-house Underwriter to see if the system will still generate an appraisal waiver. However, I do find it quite odd that it is the seller wishing to avoid an appraisal. These typically are requested by a buyer to avoid an extra $400 fee.
I will see what I can find out.
Bank of America Home Loans
This is an older question but I was wondering how things turned out for you. Did you ever learn why the owner did not want an appraisal? Did you purchase with or without one? Generally I agree with the answers below. It is hard (probably near impossible) to get a mortgage without an appraisal. And the appraisal from the bank should give you a lot of peace-of-mind that you are not overpaying for the house. I can't think of any reason why you would not want one and the seller should be accommodating because it helps you get your loan which, in turn, helps the owner sell the property.
Prudential Real Estate of the Rockies
With the additional information you provided, it only further amplifies the need for an appraisal AND a home inspection. Do you know if the proper permits were pulled for all the phases of the remodel? You'll want to call the city and make sure the permits and inspections are on file. An home inspection will help determine if the proper electrical, plumbing, and other building codes were followed throughout the remodel.
Keep in mind that a good appraiser will take into consideration the age of the home, all of the upgrades, remodels, etc. and will value the home based on it's current condition. The seller needs to realize the money invested in the remodel, may not be recaptured completely when the home is sold. Depending upon the location, comparative homes in the market and finish levels, it is not only quite likely she will not realize the full dollar-for-dollar return of her remodel investment, it may in fact be probable.
If you go into a property paying more for it than it's MARKET VALUE, consider what may occur when you are ready to sell the property. It's a risk you should not consider lightly.
I'm not sure it is necessary to have the appraisal completed prior to making an offer. A buy-sell agreement properly completed with a contingency for the appraisal should be adequate to protect you and allow you to walk away from the deal if the home doesn't appraise for the sales price. At that time, you can resend your offer and make a new offer should you decide to do so.
I recommend ALL of my buyers get an appraisal. Even when not required by a bank (CASH sale), I still recommend they get an appraisal; it's for their own protection. Not only do I recommend an appraisal, I also recommend a home inspection to ensure that any potential problems are uncovered prior to close. Purchasing a home is a huge step and I want to make sure my buyers are as fully informed as possible before closing on a transaction.
The seller basically, doesn't have any right to disallow an appraisal by the buyer. You may not want to offend the seller, but........ just considering the fact that the seller has requested an appraisal NOT be done should be a MAJOR RED FLAG!
Under these circumstances, I would not only highly recommend you get an appraisal, but I would insist upon it! In fact, I would recommend that you get TWO appraisals and insist you also get a home inspection.
If this presents a problem for the seller, I would encourage you to walk (RUN) away from the deal.
Even if you got the waiver and were okay accepting it, you would still need to speak to the seller that your lender "may" still require one.
Your seller simply may not have a choice in the matter whether a buyer gets an appraisal or not - unless they do not want to sell their home......
Bank of America Home Loans