Once a home seller has accepted an offer to purchase their property, the end of the home selling journey may feel close.
However, the mortgage lender of the homebuyer may appraise the property for a lower amount than the purchase price. If this happens, it’s vital to examine the terms of the appraisal contingency in the purchase contract.
Contingencies are put in place to protect both buyers and sellers in real estate exchanges. An appraisal contingency is very common to find on the buyer’s side of the purchase agreement. It protects homebuyers if their lender's appraisal comes back lower than the amount needed to purchase the home.
Dropping an appraisal contingency clause can be very beneficial to home sellers, as it increases the chances of the purchase decision going through.
This option can be tricky for homebuyers as it leaves them unprotected if the appraisal comes back lower than expected, but may make their offer more appealing in a competitive seller’s market.
If the appraised value of a home is less than the listing price, the seller has the option to back out of the deal if they feel they would end up losing money.
The seller doesn’t have to lower the price, however, if the homebuyer has an appraisal gap guarantee, they have agreed to cover the balance with their own funding if the appraisal comes back low.
Working with your real estate agent, home buyers and seller’s can create and examine the appraisal contingency to make sure it’s best fitting their home selling and buying standards.
In twenty five years of real estate sales and marketing experience, I have sold hundreds of properties, while developing detailed knowledge of Sonoma & Napa area communities. I am a life-long resident in the North Bay and after a full day at work, I enjoy spending time with my four children, and participating in their many school and recreational activities.
Over the years, my clients have expressed diverse plans and dreams. I seek to truly understand and appreciate my clients' goals, focusing my efforts on realizing them. It has been fun learning more about the unique opportunities that attract people to the area such as the culinary community, the viticulture and wine industry as well as outdoor adventure tourism. It is important to me to listen to my clients, do what it takes to serve their needs and I am dedicated to treating everyone involved in a transaction both in a personal and professional manner. I work hard to anticipate and respond to the routine tasks at hand as well as the complex challenges that come up during real estate transactions while ensuring my goal to deliver you the outcome you desire.