What is an appraisal guarantee?

appraisal guarantee

With the fierce competition in the marketplace right now, it is not uncommon for the same property to get multiple offers, all over list price.

While the seller is likely thrilled with the purchase prices being offered, they often also have concerns about appraisal… what happens if the appraised value comes in lower than the agreed upon purchase price?

To help relieve those concerns, buyers are more and more often including Appraisal Clauses as part of their offers.

It might be a Partial Appraisal Guarantee such as the example below…

Buyer agrees to pay $XXX above the appraised value not to exceed the Purchase Price. If this amount is not sufficient to satisfy the appraisal deficiency all parties agree to re-negotiate in good faith to reach a satisfactory resolution. If a satisfactory resolution cannot be reached,  Seller may declare this agreement null and void with all Earnest Money returned to Buyer.

An appraisal clause could also include a Full Appraisal Guarantee such as the example below…

Buyer agrees to waive their right to cancel or re-negotiate the purchase price due to a low appraisal. If the home does not appraise for at least the contract purchase price, buyers will bring additional cash to closing to bridge the gap, capped at the agreed sale price.

Today’s buyers are becoming more and more creative in their offer terms.

Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com

RELATED POST

Written By

I love what I do! Highly insightful, analytical and creative, there is nothing I love more than helping you find the right solution for your real estate transition. My mission is to serve my clients with honesty and integrity, exceeding their expectations in service and support… and to help others by donating a portion of every transaction to Habitat for Humanity.

Related Posts

Weekly real estate market update 7/12/24… why asking price matters more than ever right now

đź–¨ Print Article The market is getting back into gear after the July 4th holiday. It makes me smile how new and coming soon listings flip flop at holiday times....

Boludo… amazing Argentinian pizza

đź–¨ Print Article After spending time at the Weisman Art Museum one day last week I was hungry… and being not far from The Market at Malcolm Yards I thought...

Subscribe to Our Newsletter for Market Updates & Mid-Century Modern Listings

Our weekly HomesMSP Update includes current local market information and a curated list of mid-century modern properties for sale, plus posts from an inspector, a lender, a stager, info about neighborhoods, life in the Twin Cities… even recipes!

Hidden

Blog Categories

Archives

Sharon and John Hensrud

About Us

The HomesMSP Team is committed to meeting you where you are and listening… really listening to understand you so we can use our extensive knowledge of the market and local neighborhoods to give you personalized service.