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Mortgage Contingencies - Good for Sellers?

Homesellers - should you accept the highest offer even if it doesn't have mortgage contingencies? 

 

Gretchen:
Is it really cash? Stay tuned. We all know that high buyer demand coupled with record low inventory has created the ultimate sellers market. So sellers, do you think that accepting the highest price offer with no contingencies is a slam dunk? I'm here to tell you to proceed with caution and here's why. Just because a buyer has dropped their mortgage contingency doesn't mean that they're not getting a mortgage in order to finance that purchase. It simply means that they are willing to risk their deposits in order to have a more competitive offer. And in this market where home prices have increased dramatically, the appraised value of a home, it may not keep up with the price that a buyer is willing to pay.

Gretchen:
And in order to get that mortgage, the buyer's going to need to come up with funds for that shortfall. That could leave the buyer without enough cash to close your deal. And no seller wants to be three weeks into a deal having lost momentum, having to go back on the market and perhaps having the perception that something was wrong with the home. So in order to avoid that, you're going to need to be working with an agent who knows how to vet a buyer's financial qualifications in this situation. And in particular, somebody that's expert in the knowledge of recent sales in your neighborhood to make sure that they would understand the difference between the appraised value of a home versus what a buyer is willing to purchase the home for.

Gretchen:
Your agent should be having a very candid conversation with the buyer's lender to make sure that not only does the buyer have the ability to make their down payment for the purchase, but perhaps come up with any shortfall between the appraised value of the home based on the lender's assessment versus what they've agreed to pay for the home. So if you have any questions about this issue or about selling your home in general, I'd love to hear from you. Until next time, stay tuned and stay focused. I hate the double guns. I don't know why I do the double guns.

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