Protecting Your Client

Last month I had the pleasure to work with an an absolutely incredible client on selling their home and a purchase. We had looked at many homes before deciding on their forever home in Plymouth. As you may know, the current housing market is extremely competitive so when we saw this home, we knew we had to make a very compelling offer. Our offer ended up getting accepted on the basis of price and being the first offer on the table with many other offers behind us. We had offered $30,000 over asking price but with one stipulation, which brings me to the point of this post.

As you also may know, appraisals play a big part in a competitive market like the one we are in. With so many buyers having to make offers that are over list price, appraisals can sometimes play a big role. If a home does not appraise for the agreed upon sale price, the lender will only lend you the amount for what the home appraises for. For example, if you agreed to buy a home for $400,000, but the appraisal comes in at $3600,000, the bank will only lend you $360,000. So that leaves you with a $40,000 discrepancy. This is where protecting your client is such an important aspect of being a great Realtor. With that $40,000 discrepancy, like we used in the example above, one of the two parties needs to be accountable for. In my client's situation, the appraisal actually came in $35,000 lower than our agreed upon purchase price. Luckily, my clients were not worried because I had a set in place in our purchase agreement an escape clause and a contingency just for good measure; that if the appraisal came in lower than our agreed upon purchase price, we would only cover the discrepancy up $10,000 and the seller would have to be ok with the new purchase price. As you may also know, things don't always go according to plan. The seller was extremely upset with the appraisal on his home and would not follow through on terms set forth on our contract. Unfortunately we ended up getting an attorney involved and at the end of the came to terms my client was happy with. Buying and selling a home can be very tactical and involve lots planning out. Staying a couple of steps ahead of everyone else will always be beneficial. Having a great Realtor should make you feel prepared and aware, especially in the crazy market we are in now.