My buyers want an appraisal before closing


Dear David: When we sold our house, we received eight offers. We picked one that was firm with no conditions. Weeks later, the buyers are asking for an appraisal. Can they do that if there was no financing condition in their offer?  – PANICKED

DEAR PANICKED: Don’t be alarmed, this happens all the time.

Many buyers enter the housing market having been pre-approved by their bank. Pre-approval means that the bank is comfortable lending these buyers a certain amount of money, based on their finances. When the buyers make a purchase, the bank will need to confirm they struck a reasonable deal before signing off on the mortgage. That’s where the appraisal comes in.

Welcome to the world of real estate in our region. We are currently experiencing an exceptionally competitive seller’s market, which you discovered when you received eight offers on your house. There are legions of local buyers scrambling over record-low inventory, and successful buyers are finding ways to make their offers stand out.

Increasingly, buyers are choosing to submit offers without an inspection or financing condition. Many will end up checking and double-checking their mortgage pre-approval, to make sure they’re not spending beyond what their bank has prescribed. If there is any uncertainty about whether their mortgage will be approved, some buyers scramble to set up backup financing, just in case.

The sales agreement you signed is a firm commitment from your buyer, but not from their lending institution. Their bank’s approval of the purchase is the missing piece, and the buyer’s mortgage is not 100 per cent guaranteed until this is provided. A bank will want to ensure that their client has not, for example, agreed to pay $800,000 for a home that is only worth $650,000.

Think of an appraisal in terms of a parent who lets their child pick out a toy at the store. Even if they give their child a budget and the leeway to make their own decision, they’ll still need to approve the purchase before opening up their wallet.


Banks require an appraisal for every home they finance. Lenders have algorithms that will approve some homes automatically based on location, postal code and price; others require an in-person appraisal. An appraisal request is not a red flag, it’s a sign that the bank is performing its own due diligence. #Advice #AskDavid #TheNegotiator

David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Moving? Get it right. Ask David today! Call or text 519-577-1212.