How do Home Appraisals Protect The Buyer?
You have finally found the home of your dreams, but there are two other people that are also interested and are submitting competing offers. So you offer a little more to make sure that you win the bidding war. After the excitement of winning the bidding war wares off, frequently buyers wonder if maybe they offered to pay too much.
You might have offered to pay too much, but home appraisals will help protect you.
Say you offered $450,000 for your dream home and you won the bidding war. But the lender wants to make sure that the asset (the home) they are using to secure their loan is worth what they think it’s worth. That’s where a home appraisal comes in.
What happens if the appraisal comes back at $440,000 instead of $450,000? Assuming the appraisal clause in your contract has not been modified, you, the buyer, have three choices: 1) You can dig into your pocket for more money because the lender is only going to loan against the lower figure – in this case $440,000; 2) or you can terminate the contract because you don’t want to pay $450,000 for a home that appraises out at $440,000; or 3) you can renegotiate with the seller.
Appraisal issues are frequently resolved by renegotiating with the seller.
So that is how a home appraisal protects the buyer from unknowingly overpaying for a home.
Whenever you are ready, here’s some ways that I can help with your real estate goals:
1) Free Access to search the Denver MLS for all homes currently on the market: Denver Home Finder Service Property Search
2) Join me for a home tour – Home tours are Monday thru Saturday at 2:00 pm or 6:00 pm – choose your tour here
3) Request a specific search that sends all the homes that meet your parameters as soon as they come on the market – that way you can beat others to the best homes. Send me an email with “specific search” in the subject line and your wish list – Price range, school district, style, minimum number of bedrooms, etc. – [email protected]
4) Receive a Home Loan Report –There are so many different loan programs. Do you need 20% down payment to purchase a home? Are there special programs for first time home buyers? What does CHFA mean? What’s the difference between a FHA loan and a Conventional loan? Send me an email – – [email protected] with “Home Loan Report” in subject field and I’ll send it right over.
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