You decided it’s time to sell and you put your house on the market. Your realtor did the marketing and produced a buyer who is willing and able to purchase the home.
But now you may need to sell it again. Why you ask?
You may now need to sell it to the mortgage company. The mortgage company will be sending out someone to do an appraisal on the property. Let’s say that you were asking $350,000 for your house. And, due to the lack of inventory, you have numerous people who want to buy the house and the selling price gets bid up to $380,000. Hey that’s great you think. We got $30,000 more than we were even asking for. Woo Hoo!
However if the appraisal comes in at $360,000, the buyer won’t be able to get the mortgage. Why? Because the house was deemed by the appraiser as not to be worth $380,000.
So what’s going to happen next? Typically one of two things will happen.
First the buyer will come up with an extra $20,000 to make up short fall. This is not all that likely. Think about it. If you were buying house for $380,000, but your mortgage company said it was only worth $360,000, how would you feel? Most people would say I’m not going to overpay for the house by $20,000.
Which brings us to the second option. Probably the seller will be asked by the buyer to reduce the price by $20,000 in order to get the appraisal, and therefore being able to complete the sale.
So what would you do in this situation?
