Monday Minute | The Appraisal Gap

During this crazy real estate market in the past year, we have seen a flurry of offers being presented. With low inventory and multiple offers on homes, buyers are escalating offers and prices well above list price so as to win a contract on a new home.  To beat the competition, you need to be quick to make a decision, have great finances, and an advantage over the rest of the offers coming in.That big advantage is the “Appraisal Gap”.An Appraisal gap coverage is a great strategy for increasing the price of your offer while being able to waive a portion of the appraised value, so that the seller is most likely to net the highest price.   So instead of waiving the entire appraisal amount, the appraisal gap coverage waives up to a certain amount over the appraised value.  It's a strategic way to state that you are willing to pay the difference of the appraised value up to a certain amount.If a seller is reviewing multiple offers on their home, ultimately they are hoping to net the most money, so they will be looking for the highest offer. But when there is a possibility of the home not appraising at the higher prices, this is where the Appraisal Gap coverage comes into play.  Even if you have a similar offer to someone else, the fact that you are willing to pay the difference on an appraisal will make your offer a much stronger one.If you are thinking about buying a home and want to learn more ways to make the best offer on a home, give us a call.  We look forward to hearing from you!