That is a good question. And the answer is….
First you need to find a buyer for your home. This is getting pretty easy these days due to the lack of available inventory. Especially so if you are selling a starter home.
And again due to the lack of available homes, you will probably get a good price for your home. And therein lies the problem. What happens if the price you get is too high?
Because now you need to sell it the second time. You need to sell it to the bank.
You see, the bank needs to protect itself when making a loan. If they give a mortgage on a property that is selling for more than it is worth, they do not have proper protection if the mortgagee defaults on the loan. Banks usually require a twenty percent down payment. If the home value drops by up to that twenty percent level, and they need to foreclose, they should probably not lose money. And we certainly would not want a bank to lose money, would we? So they banks, as part of the mortgage process, order an appraisal on the property. And if the appraisal comes in for less than the purchase price, they will only lend the eighty percent of the appraised value, not the purchase price. And if this is the case, the buyers have two options.
The first option is for the buyer to reach deeper into their pocket for more cash. The second option, which the buyers always try to do, is to have the seller reach into the seller’s pocket. This is usually done as a price reduction.
So, even though a buyer is making a great offer, you need to examine the offer in detail. Will the appraisal support the selling price? Is the buyer making a large enough down payment, or better yet, a cash offer?
These are just a few of the concerns that you face in selling your home. An error in this part of the process can result in a sale not going to closing. It can also affect your plans as to where you are moving.
How can you avoid an error of this magnitude? The best way is to have an experienced team working for you. You will need an experienced Realtor, one who works full time in the profession. Don’t select a Realtor just because they are a relative, friend or neighbor. The are many Realtors, but over 90% of all sales are done by less than 10% of the Realtors. Make sure the Realtor you choose is in the upper 10%. Or make it simple. Call us, Bunny and Art Reiman at 732-598-7700.
We can help