Buying a Home - Magazine - Page 10
Be ready to close an appraisal gap.
With current home price appreciation, appraisal gaps are becoming more common.
An appraisal gap occurs when the price of your contract doesn’t match up with
the appraisal for the house.
According to data from CoreLogic:
“Beginning in January 2020, nationally, 7% of purchase transactions had a
contract price above the appraisal, but by May 2021, the frequency had
increased to 19% of purchase transactions.”
When this happens, chances are your lender won’t loan more than the home’s
appraised value. That means there’s going to be a gap between the amount of loan you
can secure and the contract price on the house.
In today’s competitive market, the seller may ask you to pay the difference out of
pocket. Make sure you know your budget, know what you can afford, and work with a
trusted advisor who can help you make all the right moves as you buy a home.
Bottom Line
Bidding wars are creating an auction-like atmosphere in many real estate
transactions. Let’s connect so you have a trusted real estate professional on your side
to provide the best advice on how to make a competitive offer on a home and how to
navigate the process.
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