Maybe you have been on the market for a residential property for several years. It has been a seller’s market for some time in Delaware, making it hard for people to buy a home. If you just made a successful offer on a property, you are probably excited that your hunt for a home is finally over.
Whether you are looking to move to a different neighborhood or transitioning from an apartment renter to a property owner, you likely can’t wait to sign the closing paperwork and get the keys to your new home. Unfortunately, a lot can go wrong between the offer on a property and when you take possession of it later.
Now that the market has started to soften, prices have dropped a bit. Buyers may find themselves in an uncomfortable position if they offer more for the property than an appraiser thinks the home is worth. How can you handle an appraisal gap and move forward with your purchase?
You can negotiate with the seller
Sometimes, the seller may need to accept the fact that the market no longer supports their asking price. They may agree to sell the home for the appraised value if it is close to the original offer amount. If there is an appraisal gap of more than a few thousand dollars, however, they may not agree to reduce the price based on the appraisal.
You can raise funds to cover the gap
An appraisal gap doesn’t necessarily mean you can’t purchase the property. It just affects how much the mortgage company will finance.
You could potentially use your own money to cover the difference between what the appraiser says the property is worth and the price you actually offered. You could even take a loan from family members if you don’t currently have the liquid capital to cover that extra money.
You can talk to another lender
Different appraisers may return slightly different prices. Buyers who don’t think the appraisal was fair or accurate might consider applying with another mortgage company.
The company will order another appraisal. A different appraiser could return a different price. The market will continue to fluctuate so there is no guarantee that prices will go up as you wait. They may instead decline, making a larger gap a possible outcome of such efforts.
Many home buyers can avoid the headaches caused by appraisal gaps if they track market prices and ensure they don’t offer too much for a property. Identifying and planning for common complications during residential real estate transactions will help buyers reach the closing table.