A big hurdle in multiple bids is that buyers commonly pay over ask price to win a bidding war. While a buyer might be willing to pay that price, an issue we’re frequently coming across is the property then not appraising to meet the agreed purchase price. That creates a challenge and can kill a deal, because a lender will not approve a mortgage for more than the home’s appraised value.
Here are three tips to consider, should you find yourself in that situation:
3. Re-negotiate the Price Between the Buyer and Seller – Granted, in a multiple-bid situation, a seller who has back-up offers that are still active/ interested may refuse to lower their price. A few options:
- The buyer agrees to pay the difference in cash to the seller/ brings more cash to the closing table to make up the difference.
- Both buyer and seller agree to meet halfway or come to some monetary agreement where both contribute – the seller lowers price to cover a portion of the difference, and the buyer then pays the rest in cash at closing.
- If a buyer can not pay any additional cash, the seller can either lower their price to cover the full amount or terminate the contract to accept a back-up offer, or they can re-list the property.
2. Contest the Appraisal – A buyer and or seller can opt to contest the appraisal, in the hopes the appraiser will adjust the price to reflect the agreed purchase price. The appraiser must be given a reason to change their results. Typically, a buyer and sellers’ agents will provide new comps to support their case, or highlight new or upgraded features to the property that could have been missed the first time around. At times, there is no adjustment. Hopefully, though, the appraised value will come to the desirable number.
1. Change Lenders – While this is not ideal in most cases, and may potentially delay the deal, seeking advice from a second source may change the outcome.
Chloé Ifergan is a real estate broker for @properties. Fluent in French and Spanish-proficient, Chloé was the advertising, marketing and social media director of Charles Ifergan Salons before entering real estate. She is a board member of the Lynn Sage Cancer Research Foundation, and she also serves on the Leadership Circle of the Chicago Alliance Against Sexual Exploitation, a nonprofit dedicated to ending the perpetration of sexual harm in Chicago.