{"id":1988,"date":"2021-02-10T00:30:30","date_gmt":"2021-02-10T00:30:30","guid":{"rendered":"https:\/\/frankbuysphilly.com\/what-is-a-home-appraisal-gap\/"},"modified":"2021-02-10T00:30:30","modified_gmt":"2021-02-10T00:30:30","slug":"what-is-a-home-appraisal-gap","status":"publish","type":"post","link":"https:\/\/frankbuysphilly.com\/what-is-a-home-appraisal-gap\/","title":{"rendered":"What is a home appraisal gap?"},"content":{"rendered":"


\n<\/p>\n

When you go to buy a home<\/a>, your mortgage lender will almost always order a home appraisal<\/a>.<\/p>\n

The purpose? They want to verify the home\u2019s worth. Specifically, they want to be sure it\u2019s worth the money they\u2019re lending you and, most importantly, that they\u2019ll recoup their investment if you default on the loan. Put simply, it\u2019s a risk-mitigating measure.<\/p>\n

But what does it mean for you as the buyer? Well, there are two scenarios you could find yourself in.<\/p>\n

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Scenario 1: Your home appraises at your full offer price<\/h2>\n

Many times, the home appraisal goes off without a hitch. You make an offer on your dream home, and the appraiser verifies the property is worth what you offered (or more). <\/p>\n

In this situation, your lender approves your loan amount<\/a> without much hassle.<\/p>\n

Scenario 2: Your home appraisal comes in low<\/h2>\n

Other times, the appraisal may come in low, and you could end up with a home appraisal gap \u2014 a discrepancy between your offer on the home and what the property is actually worth. <\/p>\n

When this happens, your lender will only loan you up to the appraised value.<\/p>\n

This leaves you with three options if you want to move forward with the sale. First, you can make up the difference in cash. If it\u2019s only a few thousand dollars and you\u2019ve got a flush savings account, this might be doable. If not, you have two other options.<\/p>\n

Your next move would be to renegotiate with the seller. There\u2019s a chance they may be willing to accept a lower offer on the home \u2014 especially if they\u2019ve already moved out, bought another property or it\u2019s a buyer\u2019s market and there\u2019s little demand for the property. Your real estate agent<\/a> can help if you decide to go this route. You can also:<\/p>\n

    \n
  1. Offer to split the difference.<\/li>\n
  2. Ask for seller concessions<\/a> to make up for the increased price.<\/li>\n
  3. Offer free lease-back, letting them stay in the home while they find their new place.<\/li>\n
  4. Change your closing date to a more convenient one for the seller.<\/li>\n<\/ol>\n

    Finally, you can also back out of the deal entirely. If you had an appraisal contingency in your sales contract, you could do this without any sort of penalty. If you didn\u2019t have the contingency, you\u2019d have to forfeit your earnest money deposit in order to back out.<\/p>\n

    One more option<\/h2>\n

    If you have an appraisal gap, there is a fourth, typically less successful path you can take, too. In this one, you\u2019ll either challenge the home appraisal or request a new one.<\/p>\n

    To challenge the home appraisal, you\u2019d need at least a handful of comparable sales from the area \u2014 ones that prove local homes are selling for about what you offered. Your agent can help pull these for you. Just remember, the closer the comps are to your home\u2019s size, style, condition, and offer price, the better.<\/p>\n

    You can also request a new appraisal from your lender, but you\u2019ll need to pay for it out of pocket. These usually cost upward of $300. Some lenders may not grant this request, so make sure you have a back-up option.<\/p>\n

    The post What is a home appraisal gap?<\/a> appeared first on HousingWire<\/a>.<\/p>\n


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    Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    When you go to buy a home, your mortgage lender will almost always order a home appraisal. The purpose? They want to verify the home\u2019s worth. Specifically, they want to be sure it\u2019s worth the money they\u2019re lending you and, most importantly, that they\u2019ll recoup their investment if you default on the loan. Put simply, it\u2019s […]<\/p>\n","protected":false},"author":2,"featured_media":1989,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33,1],"tags":[],"_links":{"self":[{"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/posts\/1988"}],"collection":[{"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/comments?post=1988"}],"version-history":[{"count":0,"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/posts\/1988\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/media\/1989"}],"wp:attachment":[{"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/media?parent=1988"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/categories?post=1988"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/tags?post=1988"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}