If you’re buying a $300,000 home, but the appraisal comes back at $297,000, you’ll need to pay the remaining $3,000 out of pocket in addition to the down payment and the closing costs that are paid up front at the time of purchase.
If the appraisal comes in too low, you might not have the necessary funds in your bank account to actually make the purchase of the home. Since you have already signed the purchase and sales agreement, you have signed a legally binding contract that states that you will in fact buy the home from the seller. If you break the agreement, you’ll lose your deposit, which could be a significant sum of money.
Most purchase agreements contain something called an appraisal contingency. This is an out for the buyer in the case of a low appraisal. If the appraisal is less than the agreed upon price, there’s a way for you as a buyer to get out of the contract without it taking a hit on your finances. You need this contingency to protect you.
You could be in a situation where you might consider waiving the appraisal contingency. This would be a case where you agree to pay the entire amount of the contact price, even in the event of a low appraisal. This gives the seller a clear message that you want the home no matter what. The only way that you should even really consider doing this is if there is a lot of competition for the home that you want to purchase. If an appraisal comes back much lower than expected, you’ll be expected to make up the difference in price. In most cases, it’s a good idea to keep the appraisal contingency in the agreement to protect yourself as a buyer.
This is why it’s so important to hire a real estate agent. In many states, agents are able to give you advice on the best course of action for buying a home. You can also hire your own attorney to help you through the legal portions of the home buying process. In other states, attorneys are required for the sale of a home. These lawyers will be able to advise you as a buyer what’s in your best interest. Your attorney is there to protect you!
Whether you plan on selling your home in the next few months or the next few years, it’s always a good idea to start thinking about the things that can increase or decrease the value of your home.
There are some factors that are mostly out of your control. Things like climate and the state of the housing market aren’t something you can do much about. However, there are several ways you can gain an edge once you put your house on the market.
In today’s article, we’re going to talk about some of the main things that contribute to the value of a property, and a few lesser known ideas to help increase your home value.
Before you start thinking about adding bonus features to your home you should make sure the basics are covered. To maximize appraisal value, your home should be:
Structurally sound. The foundation, roof, plumbing, and other vital items need to be in top shape.
Efficient. Houses that haven’t been updated with energy efficient windows, insulation, and HVAC systems are going to drag down the value of the home. Prospective buyers want to know they won’t be spending extra each month of the utilities.
Well-maintained. Inside and out, having a clean appearance shows potential buyers that you’ve taken care of the home. This includes driveways, lawns, and fences on the outside, and paint and carpets on the inside.
Size, location, and market. You won’t be able to influence these, and many times putting additions on a home can actually lower its estimated value, so it’s best to focus on other areas where you can make a difference.
Depending on how much time you have left before you want to sell, there are a number of things you can do to improve your home. Some home improvement projects are costly and time-consuming, where others can be simple and cost-effective. Here are some ideas for increasing the value of your home.
Revitalize the neighborhood. If you’re going to be living in your home for years to come, it can be worthwhile to integrate yourself into the community. Starting community gardens or converting lots into fields and playgrounds are long-term projects that will add culture and amenities to your neighborhood. Not only is this good for the town, but it could also increase the value of your home.
Small upgrades pay off. If you plan on moving within the coming months, you still have time to increase the value of your home. By replacing old faucets, handles, and doorknobs you can make older items appear new again. Similarly, minor electric upgrade, like replacing old light switches or outlets, combined with a fresh coat of paint can make a room look like new.
Simple landscaping. You don’t need to start carving topiary animals into your shrubs to increase your curb appeal. On the contrary, having a yard that is simple and well-maintained will appear cleaner and easier to take care of for prospective buyers.
Consult an expert. If you’ve lived in your house for a while, it might be difficult for you to see which things might decrease the home’s value. Contacting an agent will help you gain an outside perspective on your house so that you can plan home improvement projects accordingly.
