INCLUDE APPRAISAL GAP COVERAGE IN MY REAL ESTATE OFFER?

If you are trying to buy a house in the Dayton, Ohio area maybe you've heard the term Appraisal Guarantee or Appraisal Gap Coverage. I've been a Realtor for 30 years but I'd never heard of it until we hit a hot market in the Kettering, Beavercreek, Bellbrook and surrounding areas starting about 2019.  In a strong Seller’s Market we often see multiple offers on a single property. Going over asking price has certainly been a popular tactic lately to try to win the property. Problem is it has become so basic it often takes more than that to prevail in a bidding war.

Sometimes you need an even bigger advantage. One thing the seller gets worried about when the price goes over asking is if the property will appraise or not. If it does not appraise for at least the contract price then everything stops. Either the seller comes down to meet the appraised value, the buyer throws in some extra money or a combination of the two. So that large amount over asking that seemed so awesome at the time, doesn’t help a bit if the appraisal is short. 

Offering Appraisal Gap Coverage might be the answer to put the seller's mind at ease and help your offer get picked. This means that if the property does not appraise for the contract price the buyer agrees upfront to make up the difference or a certain amount of the difference with cash! The seller loves this because it insulates them from a low appraisal. Some buyers get nervous with this option feeling like they are paying more this way.

Remember, the price is the same as you agreed to. You are just putting more money down. Not everyone that can do this is willing to do it. Just know it is an option and I can explain in more detail the ins and outs of it. Happy to share other best Realtor practices with you as well when it comes to making your offer stand out.