Ethos Real Estate West Update

Appraisal Guarantees

  A trend right now to stay competitive with so many multiple offers on each home for sale is to guarantee in cash the difference between a purchase price and an appraisal that does not have a value at the purchase price.  With that, I hear much discussion.  So here are some facts:
    —  While there are comments about an appraisal being “low” if it doesn’t meet the purchase price, an appraisal is not inherently “low”.  The appraisal does not have to meet the purchase price.  The appraisal has to be based on market facts and data.  If there is not market data to support the purchase price, the appraisal will not have a value as high as the purchase price.

        —  While the market is going up, it may be less risky to put up cash for the difference in what you are willing to pay and what the house appraises for.  The risk is less because your value may continue going up over time, so the cash you offer may not always be just a difference in values.  

         — It is important to remember that there is risk involved.  If the market stabilizes or go down, the cash difference you just paid only bought you the winning bid on the home.  It did not pay towards the value of your home.  If the value of your house goes down and you need to sell your home, you will not be able to recover those funds.
**Right now the market still is showing strong!  But it is good to understand what risks are involved!