Every Home Has a Story. The Next Chapter Begins When You're Ready.For many homeowners, selling the family home is one of the most emotional decisions they'll ever make.This isn't just a piece of
Risks and Benefits of Appraisal Gap Offers
Dated: March 10 2021
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Risks and Benefits of Appraisal Gap Offers
If you’re a Home Buyer in today’s crazy Home Market, you may have already experienced the fierce competition in trying to get your offer accepted.
Buyers and buyers’ agents are trying everything possible to push their offer to the top. In some ways, this is the Free Market at work. In other ways, you need to know the risks and benefits of what is happening and how it may affect you and your future purchase.
What exactly is Appraisal gap? Appraisal gap coverage is when you agree to cover any shortage between the offer price and the appraised value. It's written into your offer and often includes a specific number of how high you will go. Its purpose: to show the seller you are serious about the home and are willing to pay more. It’s Risky but necessary in this frantic home market.
This can be confusing. The key, as a buyer, is to know what you’re comfortable offering and the maximum you will pay over the published list price of the home. Make sure you have the conversation with lender about your plans to offer an appraisal gap. You want to know you will still be approved for your loan. Your gap could be a set amount over appraised value not to exceed purchase price. Some buyers are offering a full appraisal gap amount. This means no how low the appraisal comes in they will cover it up to the purchase price.
If you are a Seller, this market looks very attractive, when receiving multiple offers over asking price. Who wouldn’t be excited about that? Beware of the appraisal gap language in the offer from the buyer. Know that if the appraisal comes in lower than what the appraisal gap covers, you could be selling your home for less than what you had expected.
In either situation, make sure you fully understand the process and how it could potentially affect the outcome of your home buying or selling transaction.
If you’re thinking about selling or have any questions regarding this or any other Real Estate topics, please feel to contact me!
Centennial CO Real Estate- Mike Conner, is a Licensed Colorado Realtor with EXIT Realty DTC – I list and sell homes in Centennial, Aurora, Parker, Highlands Ranch, and all nearby communities. Visit my Website to see local available home listings or to get your Free Home Evaluation. Call or text Mike today at 720.422.1765
Mike Conner
Mike Conner is a trusted Realtor serving Aurora and the surrounding Colorado communities, with a special focus on Seniors 55+ and Move-Up Buyers navigating life’s next chapter. With years of exp....
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