Here’s how an appraisal gap guarantee helps you win versus other buyers.
If you’re using a loan to purchase your future home, your lender will use an appraiser to evaluate it and determine whether or not the home is worth the agreed-upon purchase price. In this competitive home-buying market, there are going to be multiple offers on most properties. Today I’m excited to share a strategy that you can potentially use to win out over the others. It’s called an appraisal gap guarantee and here’s how it works: An appraisal gap guarantee promises the home’s seller that you’ll cover any shortage between the property’s offer price and the appraised value.
Let’s say the home is listed at $500,000 and you either include an escalation clause of up to $550,000 or simply write an offer for $550,000. For the seller to believe you’ll make it to closing, you’ll need both proof of funds and an appraisal gap guarantee. You’re telling the seller that you’ll provide the extra money at closing to fulfill the contract price.
This is just one way to win in today’s market. If you have questions about this or any other real estate topic, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.