A lot of sellers right now are all excited about the thought of receiving multiple offers on their home, thus driving up the sale price. This sure sounds like a good deal, but there is one real deal breaker lurking – the appraisal.
The appraisal is a tricky thing. If your buyer is getting an FHA loan, that appraisal will stick with your home for the next six months. This means, if it comes in low, that will be the appraised price for any other FHA buyer for the next six months. If you lose the buyer because of the low appraisal you need to either lower your price or find a buyer with conventional financing or cash. A buyer with a conventional loan may also run into a low appraisal but it will not be stuck with your home like an FHA appraisal.
Do you have other options if the appraisal comes in low? You sure do! You can keep that buyer and just lower your price to the appraised value. The buyer may be able to bring more cash to the table, or you may have a combination of those two options.
Because of the low inventory levels, buyers are ending up in multiple offer situations all the time but that does not necessarily mean your home is worth more money.
Is cash king in every multiple offer situation? With the new housing market, limited inventory and bountiful buyers, multiple offers have become commonplace and it seems that there is always someone with cash that takes the prize. Especially for first time home buyers these cash buyers are making the process a bit more difficult. Sellers want to see a solid offer so they know that their home will close as planned and nothing will “fall apart” to ruin the deal, which makes sellers a bit partial towards cash offers.
If you are submitting a financed offer there are some things you can do to make your offer more attractive to the sellers and maybe beat out the cash offer. Make sure you are offering your highest and best offer, put as much as you can in the down payment on your loan, this shows the sellers that you have some money and are serious. Submit a nice earnest money check with the offer which also shows you are serious about buying the house. Offer the sellers ample proof that you will qualify for the mortgage and offer to give them a financing approval by a certain date prior to closing.
Cash is a tough competitor, but it can also be beat. Talk to your Realtor to find out your best strategy if you are in a multiple offer situation and are competing against cash buyers.