What Home Buyers Need To Know About Appraisal Gaps
Author:
Victoria ArajFeb 28, 2024
•6-minute read
Buying a home is exciting, but when there’s a gap between the appraised value and your agreed-upon sales price, you might have a problem. You risk losing the home you’re interested in and possibly even your earnest money.
For everything you need to know about appraisal gaps and how to handle them, check out our complete guide on this important topic.
What Is An Appraisal Gap?
An appraisal gap is the difference between the fair market value determined by an appraiser and the amount you agreed to pay for the home. An appraisal gap doesn’t mean you have to cancel the sale, but it may mean you have to negotiate with the seller or pay the difference for the home out of pocket.
What’s The Appraisal Guarantee Clause?
Some sellers require what’s known as an appraisal guarantee clause. This is common in a seller’s market where buyers outnumber sellers and sellers can call the shots. The appraisal guarantee clause states that the buyer will make up the difference if the appraisal is lower than the accepted offer.
This isn’t your only option, but we’ll get into that later.