Appraisal addendum (to sign or not to sign)

Appraisal addendum (to sign or not to sign)

Arlington, TX · Member since 2018 · 4 posts · 0 votes

I am new to investing and currently put an offer on a duplex listed at 148k in the dfw area. The property is right across the street from a college and stays 100% leased all year at 700 a month each side. I can most likely upgrade to get another 100 per side. The problem is that the comps for the property are all over the place and when I placed my offer I was in a multiple offer situation. I ended up winning, by increasing my offer to 152k but had to sign the addendum saying if it didn’t appraise I would have to bring the cash difference. My option period starts Friday and I am having serious doubts that Irby won’t appraise and I may have my firstborn deal be a bad one. Still not too late to get out though. Any thoughts. Thanks 

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  • Rental Property Investor · Katy, TX · Member since 2015 · 175 posts · 111 votes
    8y

    My first question is, how much is your down payment?

  • Investor · Cameron Park, CA · Member since 2015 · 64 posts · 72 votes
    8y

    If 4K makes or breaks your deal then it’s not a deal.  

    You could require that the property must appraise for at least 148K and that you will cover the difference above that. 

  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    8y

    First off, appraisals are a joke. If you buy/sell enough properties you'll find that the appraisal typically comes in very close to the contracted purchase price. Your offer is only 3% above list price so I suspect you'll be fine.

    Second, even if the appraisal came in low, you could walk away from the contract for other reasons like inspection objections. Worst case, you could walk away and lose your earnest money deposit.

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  • Arlington, TX · Member since 2018 · 4 posts · 0 votes
    8y

    Thanks All.  

    @Dave Chapa the down payment is 25%. 

  • Rental Property Investor · Katy, TX · Member since 2015 · 175 posts · 111 votes
    8y

    @Jeffrey Bullock You should be fine. 

  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    8y

    If it appraises at 87,000 do you have the cash to make the difference?

  • Arlington, TX · Member since 2018 · 4 posts · 0 votes
    8y

    I do but I dont want to put that much down. I think I'm going to see what happens after the inspection to renegotiate. Robert T was correct, if 4k is an issue then it wasnt a deal to start out with. Thanks everyone

    @Mike Cumbie

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