Whether you are buying or selling a home, it is important to pay attention to the relationship between the appraised price and the offer on the property. This article discusses what happens if the sale price is higher than the appraised price. In the competitive real estate market that we’re experiencing right now, it’s no surprise that buyers are sometimes offering more than the value of the home. Buyers want to find the right home for their families and they are counting on the trends that real estate prices will continue to increase.
Since most sellers receive multiple offers, buyers are looking for ways to edge out the competitors. As a result, some people are using the strategy to offer more than the home is worth. But, it is important for both buyers and sellers to consider how the price will impact the transaction.
Don’t Let the Deal Fall Apart
Even if the buyer is willing to pay more for the home, it is possible that the deal might fall apart if the house doesn’t appraise for the price that was agreed upon by both parties. Low appraisals are more common than most people realize, especially when the market is trending upwards.
The problem is that most lenders will only offer funds up to a certain amount of the appraised value of the home. For example, if you want to finance the property, then it is common for lenders to only offer 80% of the appraised price. If that amount falls lower than 80% of the contract price, then the buyer might not have enough cash on hand to cover the gap.
The best solution for buyers is to build in an appraisal contingency so that you aren’t stuck with a contract that can’t be fulfilled. As a seller, evaluate the financing that is being offered to determine if the agreed price can be paid. If a buyer is offering cash, then you usually don’t need to worry about the gap between appraised value and the offer. But, proceed with caution if the buyer is planning to finance the entire amount.
Getting a Second Opinion
Just because one appraiser came in with a low property value, doesn’t mean that the value is set in stone. It is possible that the estimate was inaccurate, so you might consider a value appeal.
In this situation, the appraiser will reevaluate the property and provide information about why the appraisal doesn’t match other comparable sale prices. In some cases, lenders will allow you to get a second appraisal, and then the financing will be based on the results of the new appraisal.
And appraisals normally have a wide margin of error, so the second can appraise up.
There are many scenarios that can happen when buying a home, which is why it is essential to have an experienced real estate agent to assist with the transaction. Whether you are buying or selling a home, you need to enlist the services of the best real estate team in Atlanta: DUFFY Realty. Call today if you have questions about your home offer: (678) 318-1700