Buying in the DMV (DC, MD, VA) area. Of course the market is crazy and offers are going well over asking price. I know a strategy is to overbid by a lot just to get you a seat at the table and hope that the house appraises for much less and talk them down. Have people been successful with this?

like
Posting as :
works at
You are currently posting as works at

Couple things.... if you are planning on using a mortgage to buy your home, then the bank provided mortgage will not allow you to buy a house for more than it appraises for. That’s a good insurnace for you. YOU CANNOT WAIVE APPRAISAL CONTINGENCY WHEN USING TRADITIONAL FINANCING!

An escalation clause is an addendum that states the buyer is willing to increase their offer to $x amount higher than the highest offer up to $x amount. This is a good tactic but decreases equity...

If you want a real pro-tip, use APPRAISAL GAP COVERAGE! This is attractive and doesn’t require waiving inspections. This allows you to agree to pay an amount of the difference between the appraised value and agreed upon purchase price, outside of the bank backed purchase. This provides insurnace to the seller, making your offer attractive. If you really wanna beat the system, make your AGC a percentage of the difference between the SP and AV....

Ex 1 - base case
Sales Price = $100,000
Appraised Value = $100,000
Bank allows for 80% borrow of $100k
Buyer pays $20k
Seller gets $100


Ex 2 - appraised below, with no AGC
Sales Price = $100,000
Appraised Value = $90,000
Bank will only allow you to borrow 80% of $90k.
Deal is jeopardized, and probably falls through.... if not:
Buyer pays $18k
Seller gets $90k :((


Ex 3 - buyer uses fixed amount AGC (most common)
Sales Price = $100,000
Appraised Value = $90,000

Bank will only allow you to borrow 80% of 90k
You agree to pay seller up to $5k of difference between AV and SP.
Buyer pays $23k :(( higher than expected
Seller gets $95k :) better than what it appraised at


Ex 4 - buyer uses AGC as a percent
Sales Price = $100,000
Appraised Value = $90,000

Bank will only allow you to borrow 80% of 90k
You agree to pay seller 20% of difference between the two values.
Buyer pays $20k :)) as expected
Seller gets $92k :) better than what it appraised at

like

What if the home appraises higher? Doesn't the buyer end up paying more then?

I’m afraid of being in a situation where the buyer won’t come down even if the house doesn’t appraise meaning I’d be stuck paying the difference. (Have limited funds to do this since I won’t be asking for closing costs assistance)

Keep trying and try houses that are not perfect and have less interest.
The nice ones get 15+ offers

Don’t waive appraisal contingency unless you have extra cash!

I am trying escalations and HI with void only hoping to get my clients under contract as aell

Home Inspection. Instead of dropping it you can keep it with “void only” option.

like

I bought in the DMV recently and used an escalation clause and offered to cover closing costs so I beat 7 other offers. I was nervous about the appraisal but then it came in 10% over my winning bid. My winning offer was 15% over list price.

How does the escalation clause work? Did you have insight into everyone’s offer at some point and then chose to go higher?

We went around this by finding a place that we knew needed some repair work. Two potential buyers had already walked away when we put in our offer. I’d recommend getting a thorough inspection, estimating the cost of fixing it up and weighing your options accordingly.
I felt more comfortable knowing what we’d roughly be paying for improvements than going in a potential bidding war.

Can you get a rental house until market calms down? Option 2: go for rundown property

Related Posts

Till now i have lost around 10 lacs in stock market which includes 3lac taken from father, my friends tell that acha time ayega , hope they are right. Just want to stay away now from stock market.

like

I am new to FIRE concept but very much intrigued- to get freedom to follow my passion earlier. I am 48 and my SO is 49.
Currently assets - 1.1M in combination of 401k, Roth and trad. IRA. 120k in brokerage. We both currently max out our 401k and Roth every year and also invest 1k every month in brokerage.
30k in 529 for 1 kid - hopefully will not need much more. 4 mths expenses in cash.
I would love to retire in 7 yrs at 55. SO wants to work until 62.
So you think we have enough to retire?

like

What is the best way to send money to Canada from UAE? Bank is charging around 3.5%.

like

How is anyone supposed to be able to retire early with marginal tax rates near 50% in areas like NYC? Any investment gains get absolutely crushed

like

Is a $1M life insurance policy a good investment at 25 if you’re maxing out your 401k/Roth IRA? The rates are great now considering health and age. Premiums for 14 years and then no more payments

like

How does $19,500 401k participant contribution limit differ from $57,000 defined contributions limit (all sources, employee + employer)?

In addition to pre-tax, I do post-tax 401k contributions. And I see online they “some plans allow employee to make after-tax contributions once the 2020 $19.5k contribution limit is hit, up to limit of $57k”

So once I hit the $19.5k, I can do up to $57k (including employee contributions), but in excess of $19.5 needs to be post tax. Correct?

likehelpful

Is there a way to buy amazon shares with your own money on discounted price if your from amazon?

Something like employee share plans ?

Not the rsu!!

like

Not sure if this is the right bowl. Have any of you filed bankruptcy? How does that affect your corporate AMEX card?

smart

What are the best stocks to buy now that it’s all down?

like
like

What are thoughts on using leveraged ETFs instead of crypto? I would like to get into crypto but it seems administratively burdensome. I could invest in some leveraged ETFs (UPRO, TQQQ, UDOW, UMDD, etc) and get potentially high returns. Anything I would put in there would be like crypto, just investing what I can afford to lose.

like

Married fish🐠: How long did it take you to save up for your wedding? What are some ways that you saved ?

(Specifically targeted to people who had to front the costs themselves w/ no family help.)

like

Mortgage strategy question: moving from HCOL to MCOL city, selling current house and buying a new one. Will net enough equity from the sale for up to 20% down payment. How do you think about mortgage rates, points, PMI, etc for the new purchase? I'm in favor of putting less down and investing the difference, but not if the terms are worse.

And I'm talking with both a broker and a credit union - is one better than the other?

like

Any expecting Deloitte moms here? What insurance plan are you getting? I’ve been on husband plan but wondering if I should switch this coming year!

like

What are some side hustles y’all have, what kinda cash you pullin in, and how long did it take to get there?

likefunny

Today, I officially have enough money to pay off the entire balance of my student loans. Won’t pull the trigger until SCOTUS issues a decision, but having the ability to do so is such a weight off my shoulders that I had to tell someone.

likeuplifting

Fairly recently divorced and feeling the financial pinch of having one income. Unfortunately my salary is not in the 6 figures. I am afraid I need a second job (part-time). Is anyone else in a similar situation? What part-time job did you find or recommend?

like

Rental property in Austin or SF Bay Area?
I could get 2 in Austin with cash in hand or 1 in SF Bay Area

like

For all of the commercial Guys/Gals out there, how has the property market been treating everyone? Large increases? Tightening terms? Increased deductibles? Have you found a great property market? Feel free to be specific on what markets you work with.

like

Hi,
The brokerage receipt I will be getting have only RERA no. No GST IN no.
Can I claim the brokerage or anyone has claimed before using RERA no.
Broker told me he only has RERA no

like

More Posts

Which office getting inaugurated on August 15?

like

What is most demanding course in project management field now a days?

In interview they mostly ask for prince2 or pmp but I think they are many more new courses one is agile

like

Wrapping up my second year as a buy-side ER analyst (started at a sizable long-only straight out of undergrad in Summer 2019). ok to wear Ferragamo loafers to work or still too early?

What’s the best website to find potential roommates for an August/September lease?

like

Does anyone use LinkSquares contract management software? Any thoughts? My company is considering purchasing it but would like some honest reviews before doing so.

like

Hi Fishes,
Hope you and you're loved ones are safe.
Any one from accenture UK.. working as consultant? Could you please tell me what is the minimum experience to become consultant in UK accenture and role/responsibilities?

Kindest regards

like

What is the maximum hike TCS is offering to an employee having working experience of more than 4 years ?

like

I just made the decision to leave a company that did not align with my values. I was honest with myself, the company, and their future best interests by giving until the new year to find a replacement person. I had a very big bonus on the line, but personally refused to accept people in authority publicly addressing and mocking a department as the 'Special Olympics' (with legit autism & insane skills), among other extremely sexist & inappropriate comments. Do they have a right to withhold bonus?

like

What are your favorite personal finance books? I just read Rich Habits and really liked it. I am also reading the Psychology of Money. Looking to read some more!

like

Hi fishes,

Any one working for lumen project in IBM

like

Is it true that if Hermes offers you one of the sought after bags, and they bring it over from the back, and you don’t buy it then and there, you’re blacklisted on the spot?

like

One of the FAANGs is reneging after I accepted and signed on the written offer, telling me that they offered one level above (by mistake) than what i was approved for. They are now offering a lower compensation which is basically lower than what i make today and dont want to accept it. I took steps at my current job and wrt housing which can’t be fully rolled back. What are my options?

like

I’ve been given a D&I project for my firm which is ideal because it has always been a passion of mine. In the process I’ve noticed that no one is actually committed to this cause. How do you make management see that it’s not just about writing a check?

like

Should prostitution be legal? Why or why not?

likeuplifting

Which- if any- agencies appear to be bouncing back? (Rehiring covid layoffs, winning new biz, etc)

like

Anyone down to visit DPRK, DRC, Eritrea, and Yemen? Feeling brave and curious

likesmart

Any yoga experts here? Been practicing for a few months but I actually want to advance and grow into more difficult poses (versus a casual 2x week hobby type). Any program recs? How do I go about it?

like

People who work in banking, and especially in France, have you ever been badly treated by your colleagues with an attitude as if you’re not even worth a piece of sh** ?

I don’t know if it’s because people in the banks are like this or if it’s because french people are rude. But the way my colleagues behave (fortunately, just some of them, not all) would be considered extremely impolite and uneducated in Asia (where I’m from). Would love to hear some of your opinions about this!

likehelpful

Has anyone moved from creative to brand management - if so how? Learning curve? Considering a pivot to extend longevity in my career….

like

Hi Fishes,
Can you guys suggest a good place to rent with all amenities & facilities in Perungudi area for a Non-Tamilian bachelor.
I am looking to have an independent house on rent in Perungudi, Adyar region.

like

Additional Posts in The Real Estate Bowl

Found a townhome that’s right on Lake Lanier and a new construction. It comes under the Buford High School so ticks all the boxes. I am unsure if it will be difficult for me to rent it out due to the location. This will be a rental property. New to Atlanta and suburbs so would appreciate opinion from folks who are local. Thanks!

like

Rental property in Austin or SF Bay Area?
I could get 2 in Austin with cash in hand or 1 in SF Bay Area

like

What is the fastest way to get 100k for a down payment. Should I raid my 401k?

like

Anyone have luck with owning a rental in a college town?

like

Has anyone here used redfin to sell their home? Was it a good experience? How much commission did you end up paying? Was it a quick process in this seller's market? How much did you have to be involved?

I have a new build I want to sell, would you recommend going through them?

like

While shopping around for mortage, will my credit history be impacted every time I get quotes? If not are there any restrictions on with number of lenders you can get quotes from without impacting credit history

like

New to real estate investment and looking for a guidance to choose my first investment-
1. Buy turnkey property in markets like Memphis/KC/Jacksonville for cash flow and little appreciation
2. Buy SFH in booming market like Austin/Dallas mainly for appreciation with break even or negative cash flow

like

Yay or nay. 675k rental investment home. Tenants pay 4350 leased for another year. House is pretty decent - no major issues or fixes. Some simple cosmetic changes can increase value. Decent area likely to appreciate. No HOA and we do our own property management. Doesn’t hit 1% rule buttt expenses will be fairly low.

like

Just starting in Real Estate, what are the best ways to make connections and find new markets with covid and the online era?

likesmart

At what pt in the transaction is the furniture for a home sold/moved? Had a buyer walk the day before closing so a bit paranoid about this time around. With the last buyer, they were going inherit the furniture so this wasn’t an issue, but the new buyer does not want it so trying to have them allow me to sell it (for 2-3 days) after closing day so I’m not shit out of luck. The property is an airbnb, so if i sell everything and this new buyer walks, I’m screwed as i’ll have to pay $3400 a month.

How accurate are estimated home valuations on zillow?

like

I want to buy more property to get better cash flow. I have a condo in Chicago that I rent and now live in FL. It has great cash flow but thinking about selling and buying closer to where I live. What advice do you have for someone starting out?

likehelpful

What cap rates are you seeing multifamily trade at? It just seems crazy low!

like