In today’s housing market, homes often sell for more than their appraised value. When this occurs an “appraisal gap” often results, creating mortgage issues for the buyers. That’s because a bank typically only lends funds based on the appraised value. So, for example, if you agree to buy a home for $400,000, but the property appraises for $375,000, there is a $25,000 appraisal gap. You can be stuck making up the difference.
This article from Realtor.com offers strategies you can implement if you can’t come up with the extra funds. They include adding an appraisal gap clause to your offer, requesting an appraisal appeal or renegotiating with the seller. Of course, if you have an appraisal contingency, you can just walk away from the deal. Read the details here, so you’ll be prepared during your house hunt.
Another great way to be prepared is to have a professional team by your side. Vanguard Realty Associates is ready to guide you every step of the way.