About removing appraisal contingency
Dear BPers
I have a question about removing appraisal contingency in bidding a property and would like to hear your suggestions on it:
Recently I bid a hot property (according to Redfin). Although my offer does not have the highest price, the seller and the listing agent (and I do not have buyer agent) like 25% down in the offer and my good track record in closing deals in the past. In the middle of the bidding, the listing agent asked me whether I would like to remove appraisal contingency. Since I have enough cash and the deal is quite good to me, I mentioned that I would take up to $9,000 out of my pocket if the appraisal is less than what the asking price is. I finally got the property under contract, along with another 9 offers on the second day the property is put on the market.
After talking with another experienced investor, he mentioned that his past experience showed that if you remove appraisal contingency, the appraisal will always comes somewhat shorter than the asking price, although the appraisers never admit that they communicated with the lender. This seems reasonable, although I could be wrong, that by doing so, the lender is always in a safer position if the buyer put more chips in the game.
Now, I wonder what the BP community thinks about this situation. If I do not want to pay extra $9000 cash in the deal, what will be the best way for me to proceed? The contract just binds yesterday.
A big THANK YOU for BP to be super helpful on my questions in the past!
Lee