The Appraised Value.
If you are getting a mortgage on a home, then you will only get a mortgage based on the appraised value. What does this mean?
Once you get your offer accepted on a property, the bank will hire an appraiser to go to the property to determine its value. Now, lets say your offer was accepted on a property for $500,000, but the appraised value ends up being $450,000. What happens now? Remember, you will only get a mortgage based on your appraised value of 450k.
So if you had plans to put down 10%, you will be putting 10% down based off the appraised value = $45,000. *Remember, you are under contract for a price of 500K - how do you plan on covering that additional 50K needed to cover the balance between your appraised value versus your offer amount?
In this kind of market, it is very important to keep this in mind. Buyer's are ready to offer over the list price on properties; however, they cannot back it up if the property does not appraise at what their offer amount is.
Currently, we are in a market where if you want to make your offer as strong as possible, you have to be willing to cover some/majority of the "appraisal balance" that may come up.
Send me an email for more info!