What is Appraisal Gap Coverage a.k.a Gap Guarantee?

It goes without saying any seller wants the best offer on their home. Part of being the best is often the least risky offer.  In our current escalating market sometimes the appraisers but the brakes on offers they feel are not justified. We call it a ‘short’ appraisal when the appraiser assigns a value less than the agreed upon sale price.  his difference is called the appraisal gap. Sometimes it’s a couple thousand dollars and sometimes much more. 

In order to lessen the risk to the seller you can offer to guarantee any potential appraisal gap. Maybe you don’t want to be that exposed so you can offer a gap guarantee with a cap. Maybe 5k or 25k whatever you are comfortable with.  Of course, this is in addition to your down payment and closing costs and you may be asked to provide proof of funds to do this. Offering this upfront to a seller can go a long way toward making your offer stand out because it reduces or eliminates the appraisal contingency for the seller.

If you are looking for a top Realtor in Kettering, Bellbrook, Beavercreek, Dayton and surrounding areas please reach out.