03/23/2021
Making the right moves to get your offer accepted:
With multiple offers being the order of the day, buyers are overbidding to outgun their competitors. What happens if an appraisal comes back low? Here are a few important steps to take before writing an over-asking offer:
1. Compile a comprehensive picture of a buyer’s true financial capabilities
In addition to a preapproval, we ask for verification of funds on deposit that can be liquid within 30 days. We are sometimes shown fund balances that are in long-term CDs, retirement vehicles or other funds that cannot be readily accessed — these cannot be used.
We also check to see if funds are available from family members, friends and the like. If they are, we gather the details and make sure we have gift letters. With the preapproval and fund totals in hand, we can then set a limit on the buyer’s capabilities.
2. Run a comprehensive comparative market analysis (CMA) to determine a fair market value for any home they wish to purchase
We have discovered that in the heat of the battle, many buyer’s agents fail to determine a fair market value for a listing and, therefore, have no idea what a realistic offer might actually be.
Even though we will most often be offering more than the list price, we run the CMA because we have to know what valuation an appraiser might end up with. The actual market value provides the foundation upon which we base the calculations needed to determine how high a buyer can actually go over list price.
3. Plug the numbers into an appraisal calculator
We start with the following:
Offer price.
Percentage of loan to purchase price.
Loan amount.
Down payment amount.
Projected closing costs.
See image in slide for example of a down payment calculator
