An appraisal gap could be just what you need to win your dream home.
What’s an appraisal gap addendum? If you’re trying to purchase a home in Northwestern Ohio, you probably need to know. It’s a clause buyers can add to their contracts to make their offers more attractive to sellers and get closer to securing the home of their dreams.
How does it work? The short explanation is that an appraisal gap addendum allows you to pay more for a house than its appraised value. In other words, it helps your offer stand out in a hot seller’s market. If you need financing to purchase a home, most lenders won’t lend above the home’s appraised value. With this clause, you agree to cover an appraisal gap up to a certain amount.
“With an appraisal gap, you can compete with cash.”
Who should use an appraisal gap addendum? Any savvy buyer trying to purchase a home in this market without a cash offer should consider one. Frankly, this tactic is new to our market. Never before has appraisal gap coverage been necessary, but my clients have seen success with it recently.
As a final note, ranch homes are usually the best properties to use this method on. These homes tend to receive 10 or more offers, so without appraisal gap coverage, you might have trouble competing with cash offers.
If you have questions about this topic, please reach out to me or my team. We are always willing to help!
