Appraisal Contingency in Virginia
The Appraisal Contingency has been moved to a separate addendum in Maryland and D.C. and has become paragraph 3 of the Jurisdictional Addendum in Virginia. Although the language in the Contract itself tells agents to look to a separate addendum, Virginia agents should not be confused. No such document exists, just turn to your Va. Jurisdictional Addendum.
Caution: There is no language in Paragraph 3 of the addendum that says "if applicable" nor is there a place to check off whether the paragraph applies. Those agents wishing to ensure the appraisal contingency is effectively waived should line through this paragraph and have all parties initial indicating that it has been deleted -- even if you already checked the box that says you are deleting the appraisal contingency in the body of the contract.
When the contingency does apply, as will usually be the case, it is now time limited. The first decision you have to make when filling in the addendum is how many days to give yourself to complete the appraisal process. I say it that way, because the practice in our market is for the Purchaser to draft the offer. Since this will probably be the case, talk to your Purchaser's lender about how long they will need to do the appraisal. As a guideline, the form recommends a minimum of fourteen days.
Once the appraisal happens, the Purchaser is required to give notice that one of three things has happened: a) The appraisal was fine and the contingency is satisfied and removed b) The appraisal was low and the Purchaser would like to renegotiate the price; or c) The appraisal was low but the Purchaser is willing to close at the original sales price anyway.
These are essentially the same three things that could happen under the old contract. What is new is the Purchaser is required to give notice of the outcome of the Appraisal, even when everything is fine.
What if they don't? Then the contingency will continue until they do.
What's the deadline for, then? After the deadline, the Seller may require the Purchaser to provide one of the three required notices withing 3 days, or the contract becomes void.
Be careful, though, if you represent the Seller. Although you may be anxious to remove the contingency, if you demand an answer, and the Purchaser refuses to answer, the contract may become void . . . even if the Appraisal was fine! The failure to respond for any reason may cause the contract to become void. If you are concerned that your buyer is getting cold feet and may be looking for a way out of the Contract, you may wish to exercise your rights under Paragraph 12 to find out information about the progress of the loan approval process, and ask the lender directly about the outcome of the appraisal.
Disclaimer
Caution: There is no language in Paragraph 3 of the addendum that says "if applicable" nor is there a place to check off whether the paragraph applies. Those agents wishing to ensure the appraisal contingency is effectively waived should line through this paragraph and have all parties initial indicating that it has been deleted -- even if you already checked the box that says you are deleting the appraisal contingency in the body of the contract.
When the contingency does apply, as will usually be the case, it is now time limited. The first decision you have to make when filling in the addendum is how many days to give yourself to complete the appraisal process. I say it that way, because the practice in our market is for the Purchaser to draft the offer. Since this will probably be the case, talk to your Purchaser's lender about how long they will need to do the appraisal. As a guideline, the form recommends a minimum of fourteen days.
Once the appraisal happens, the Purchaser is required to give notice that one of three things has happened: a) The appraisal was fine and the contingency is satisfied and removed b) The appraisal was low and the Purchaser would like to renegotiate the price; or c) The appraisal was low but the Purchaser is willing to close at the original sales price anyway.
These are essentially the same three things that could happen under the old contract. What is new is the Purchaser is required to give notice of the outcome of the Appraisal, even when everything is fine.
What if they don't? Then the contingency will continue until they do.
What's the deadline for, then? After the deadline, the Seller may require the Purchaser to provide one of the three required notices withing 3 days, or the contract becomes void.
Be careful, though, if you represent the Seller. Although you may be anxious to remove the contingency, if you demand an answer, and the Purchaser refuses to answer, the contract may become void . . . even if the Appraisal was fine! The failure to respond for any reason may cause the contract to become void. If you are concerned that your buyer is getting cold feet and may be looking for a way out of the Contract, you may wish to exercise your rights under Paragraph 12 to find out information about the progress of the loan approval process, and ask the lender directly about the outcome of the appraisal.
Disclaimer
posted by Marcus Simon at
8:29 AM
Sphere: Related Content
.jpg){kind=small}
1 Comments:
What happens if the buyers release the appraisal of the contingency by notice and it turns out that the processor of the loan never notified the buyers that the property did not appraise at the value of the amount in the contract?
What is the buyers rights and how can they save themselves from losing the earnest money?
Post a Comment
Subscribe to Post Comments [Atom]
<< Home