Appraisal gap

Covering the Appraisal Gap in a red-hot real estate market. Are you familiar with this growing buyer practice? It is a key element to strengthen your over-asking offer. Sure, the seller welcomes your aggressive bid. But he/she also wants contractual assurance that you won’t be dragging both parties back to the negotiation table a couple weeks into the future. That very well could happen due to an appraisal contingency when the appraisal comes in low and the bank won’t be lending you the full amount you anticipated. Are you prepared to pay an additional amount in cash over the home's appraised value if the appraisal comes in less than the agreed-upon purchase price? That’s what some sellers are insisting on. In one recent and baffling scenario, my buyer client won the day when we actually lowered the above-asking offer by $50,000 but increased the cash cover by $30,000. It’s anticipated that this seller’s market will remain in place for several years, so let's get used to the rules of the game. An agent in Denver provides a helpful and brief summary.

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