Last year, in the midst of all the crazy multiple offers and rapidly appreciating prices, a new tactic emerged that saved the day for many buyers.
Appraisal “gap coverage” is what I call it.
With most offers coming in over list price, often times the appraised value can lag the actual market values.
The leads to many appraisals coming in “short” of contract prices, especially during the spring when appraisers only have winter sales to use.
Many agents and buyers started offering to pay some or all of any potential “short” appraisal.
Some buyers even waive the appraisal contingency altogether.
When sellers have 10 offers on the kitchen table, and one “guarantees” the price regardless of any potential low appraisal, it’s not hard to pick a winner.
As we move into the winter/spring markets, watch for a return of the appraisal “gap coverage” language in real estate contracts.
David Baker, MBA, CRS, GRI, SFR, e-PRO