When people who want to buy a house hire a real estate agent, they want their agent to make the process easier and faster. They expect the agent to handle much of the legwork so that they don’t have to spend hours looking at listings. They also count on their agent to spot issues with the property or questionable terms in the documents provided by the seller.
The advice that you offer your clients can have a huge influence on how successful or potentially frustrating their home search is. For many hopeful buyers, making a successful offer on their dream home will be a nerve-wracking step, and their agent’s guidance will be invaluable.
Buyers sometimes overextend themselves financially. Other times, their eagerness to buy a property means that they offer more than it is worth. Then, the appraisal comes in low, and there is an appraisal gap. There are several ways that you can help protect your clients from a stressful situation where they have an accepted offer but they can’t move forward with the purchase.
Keep a close eye on the market
The easiest way to prevent an appraisal gap is to be realistic about what the property is actually worth. The market can heat up and cool down very quickly, and appraisers will look at the most recent transactions involving comparable properties nearby. You will also need to keep an eye on similar properties when discussing how much to offer for the property with your clients.
Don’t hesitate to express your concerns
Buyers need to hear from you if you think their offer is too high. Especially if they intend to offer more than the asking price, it will be important to ensure the amount they offer has a basis in reality. While you don’t want to upset the buyers, they may need to hear from you that the price they’ve assigned to the home is unrealistically high.
Have a plan in case a gap arises
The possibility of an appraisal gap could put a buyer’s earnest money at risk if they can’t get financing. It could also put them back on the market, hunting for a house, more frustrated than ever. When you have resources available to help handle an appraisal gap, your buyers can potentially move forward with the transaction.
You might discuss negotiating with the seller. Talking with the buyers about ways to cover the appraisal gap, possibly by borrowing money from their family, could be another option. Finally, you want to include the right contingencies in the offers that you submit on behalf of your buyers so that an appraisal gap won’t result in any financial losses for them.
Proactively addressing issues that could derail your clients’ transactions will make you a better buyer’s agent.