Do Not Let an Appraisal Gap Kill Your Deal
Happy Wednesday,
Imagine this: You have found your dream home, made an offer, and everything’s moving smoothly. Then, the appraisal comes in low, and suddenly, your deal is hanging by a thread. Appraisal gaps can destroy even the best deals, but they do not have to if you know how to handle them.
What is an Appraisal Gap?
Simply put, it is when a home’s appraised value comes in lower than the purchase price. For example, if you agree to pay $500,000, but the appraisal says the house is worth $475,000, there is a $25,000 gap.
How It Impacts You
Lenders base their loans on the appraised value, not the sale price. That means you, as the buyer, must bring more cash to the table, or the deal could fall apart. As a seller, it might mean negotiating the price down or risking the deal.
How to Handle It
If you are buying, your options are:
- Pay the difference in cash
- Ask the seller to lower the price
- Try to challenge the appraisal (but that is not easy)
How the Right Realtor Can Help
Here is something not everyone knows: an experienced realtor can often meet with the appraiser and provide comparable sales, recent upgrades, and other key details about the property that might not be obvious. This can help sway the appraisal in your favor and avoid appraisal gaps altogether.
If you are selling, pricing your home right and working with a realtor who understands this process can keep the deal on track.
Why This Matters
In a hot market, you must be prepared for situations like this to keep your deal on track. Whether you are buying or selling, understanding appraisal gaps can save you from headaches and surprises.
Got questions? Contact me anytime, and I will help you navigate the process.
