Tahoe Real Estate – Cash Buyer – Do I need an Appraisal?

Buyers who are getting a loan to purchase their Tahoe property will most likely be required by their lender to get an appraisal on the property. When a cash buyer is purchasing a property they also have the right to get an appraisal, but do they have to?

When a buyer makes an offer on a property, they are most likely taking into account the market value information their Tahoe REALTOR® put together for them in the Competitive Market Analysis (CMA) on the property. A CMA is based on recent sales and current active listings in the area.

The difference between a CMA and a professional appraisal are the details and different valuation methods the appraiser will use to determine the Fair Market Value (FMV) for the property being purchased.

In our area, either the lender, or your Tahoe real estate agent will select, or recommend several appraisers from a local area list of insured, licensed, certified professionals. In the Tahoe market it is typically the buyers’ responsibility to pay for an appraisal.

Regardless of whether you’re a loan buyer, or a cash buyer if you get an appraisal and the property appraises for the price being paid then the appraisal contingency should become one you can remove. If the Tahoe property does not appraise for the full purchase price, then you as a buyer have four options:

1) Price Reduction – The buyer can ask the seller to lower the price.

2) Pay the Difference – The buyer can make up the difference between the appraised value and the amount you have agreed to pay. This option is typically for buyers getting a loan.

3) Pay the Agreed upon Purchase Price – A cash buyer always has the option of paying the agreed upon price even if the property does not appraise to the purchase price.

4) Cancel the Purchase – The buyer can cancel the contract.

In Tahoe most agents use the California Association of REALTORS® Residential Purchase Agreement (CAR-RPA) and one of the standard contract contingencies that both loan buyers and cash buyers have is the option to have an appraisal contingency.

The appraisal contingency will run with the time it takes for you to remove your loan contingency, or it can be a stand-alone contingency for the cash buyer. The appraisal contingency allows you to cancel the contract if the property does not appraise, without penalty on your good faith deposit.

Most Tahoe buyers like to have the option to have an appraisal done even if they are paying cash. Remember if you’re going to get financing after the transaction closes, you’ll want to be able to show your lender that the property did appraise. If you have any doubt about the price that you are paying for your Tahoe property, the cost of an appraisal is a small when compared to the investment you are making in our area.

If you’re a cash buyer and you’re in a multiple offer situation, dropping the appraisal contingency can be a smart negotiation tactic and give you the edge over your competitors. Remember as a cash buyer you still have the right to have an appraisal done even if you don’t have the contract contingency.

Does a cash buyer have to have an appraisal? The answer is no, but having an appraisal contingency is always a good option for a buyer to have.

Tahoe Cash Buyers have options and getting an appraisal is just one of them.

Thinking about making Lake Tahoe, California your second home? Check out the homes that are for sale in Lake Tahoe, California here:

Want to see what condos are for sale in Lake Tahoe? Here are the current listings:

For all of your Tahoe real estate needs –

Laura A. Allen | 530.414.1260 | Laura@TahoeLaura.com
BROKER ASSOCIATE, Tahoe Real Estate Agent
CalRE# 01473598
Coldwell Banker, Tahoe City, CA CalRE#01908304

All information is deemed reliable, but is subject to change, and/or correction without notice.

Tahoe Real Estate – Cash Buyer – Do I need an Appraisal?