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


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.

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