In this weekly Q&A, Chris Prefontaine addresses a common concern from rent‑to‑own buyers: what happens if the house does not appraise at the end of the option period. He walks viewers through a sample script to explain appraisal risk to buyers, clarifies why the standard rent‑to‑own buyer agreement is never appraisal‑contingent (because appraisals become stale after six months and the deal may close many months later), and outlines the practical options available when an appraisal comes in low: negotiate an extension with the seller or buyer, have the buyer increase cash down‑payment, order a new appraisal, or allow the buyer to walk away (forfeiting the deposit). He notes a rare, one‑off case where a renegotiation clause was added to capture upside if the appraisal rose, but advises against making this a norm. Prefontaine also points viewers to the QLS Home Study Course for the full agreement templates and promotes live events (QLS Live and Wicked Smart Summit) as deeper immersion opportunities. The video serves both as a tactical guide for investors handling appraisal issues and as a promotional overview of the QLS educational ecosystem.
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All right. Welcome to this week's Q&A Thursday. This question comes up a lot and it came up on our recent Wicked Smart Sit Down where all of you, by the way, are invited every single Thursday at 4 o'clock. The question was, what if a buyer asks, hey, what if the house doesn't appraise at the end of my rent-to-own process? So I'm going to talk a little bit about scripts for them, you know, you to them, but also just for you to understand. The script would sound something like this. You know what, John and Mary, you're a buyer. And just like buying conventionally, once you buy, you live with your decision to either capture appreciation or ride out a market shift. Think about it. When you buy a house, do you call the bank if the market goes down and complain? Or do you call the bank if the market goes up and say, hey, do you want some of this equity? Of course not. You are being treated like and you are behaving like a buyer. And as such, not only are you taking care of the house as a buyer, but you're going to capture any appreciation or downfall in the market. Now, reality. How do you address some of these issues yourself and your business? You with your seller and you with your buyer? Well, if the timeframe is approaching and appraisal is an issue, we'll revisit an extension for the buyer because presumably you did this how we teach and you gave the buyer less of a term than you have with the seller, or, and/or you're going to negotiate an extension with the seller. That happens too. This is real estate, guys. These pivots are normal. I, you know, I don't want to have you ever caught in thinking, okay, well, this is going to happen. It's going to crush me. No, every— there's a deal after deal on every deal. Right. Or you simply— I would say to the buyer, you could put more cash down, take care of the appraisal. Appraisal is just a snapshot from one person. Or you can order a new appraisal. Sometimes they're that far, they're just a little bit off. Or you can walk, of course. Your deposit would not be refunded and you could walk. Now, for you to know as an investor, these deals, and I know you haven't gotten to perhaps if you're new to these Q&As on YouTube even, you haven't gotten to the module with all our agreements in it that lives in the QLS Home Study Course. So if you haven't gotten that yet, by all means, you want to get your hands on that at the website smartrealestatecoach.com. In the agreement, you'll see with the buyer, these deals are never, never contingent upon an appraisal. Nowhere in there is that language like a conventional deal. Why is that? Because how could we make a deal contingent upon appraisal today when it's going to close in 18, 36, 60 months, sometimes longer? You can't do that. It's not possible. An appraisal is not even good after 6 months, right? Ask any banker appraiser. They're looking for solid comps within 6 months. That's the other reason. Just reality-wise, you can't do that. And that's why you'll never see it in the buyer agreement. Now, will I tell you that we've been asked that from every buyer? What if it doesn't appraise? No, I can't even. I mean, maybe Nick, our buyer specialist, my son, can tell you more accurately. But I'll tell you that out of the hundreds of deals we, we do and did, I can remember maybe a small handful when I was intricately involved in the whole process at the beginning that we got asked that. And on one occasion, just one, Because we are comfortable with the market, we're comfortable with everything. We actually put a component in there that said we'd renegotiate if the appraisal came in too low. I also said to her, it was a woman at the time. I also said, okay, so if it increases in value, are we going to be able to increase the price? And she agreed to that. And I think we came up with like 25% of the increase, which was, I think it was crazy for her to do that. But that's what we did. That was a one-off. I don't want to make that a norm for you by any shape or form or fashion. Now, if you would like to kind of hear more Q&As, not just on this playlist here on YouTube, but you'd kind of like to get in the trenches more with us, I alluded to at the very beginning of this video the weekly Wicked Smart Sit Down. But also, why not come camp out at our live events? There's only 2 a year. And post-COVID, it's just awesome being back in the room. And there's no better environment to be in where Q&As are being brought up on stage because of what's going on in the room. And that just is an immersion process for you that you'll never forget versus just going through these ad nauseam. So the 2 events, you can find them at qlslive.com, and that's in September, and wickedsmartsummit.com, and that's usually end of March ending sort of around April 1st almost every year. So go check out those sites. I don't know when it is that you'll be seeing these, but those are always going to be running. And if you are a purchaser, an owner Of the QLS Home Study Course, you actually attend the QLS Live event, the first one, for free. You don't have to pay for it. So I encourage you to get there. You will consider it time super well spent, and I hope to see you at those events. If not, see you on the next Thursday Wicked Smart Sit Down. Make it a great week. Thank you.
