Occasionally you may acquire a property listing at a time when only a few comparable sales are present. And if those happen to be distressed sales, you could have a problem getting full-price for that listing...especially from buyers who aren't paying cash. Here is a strategy you may want to implement....
Many agents resign to only searching for cash buyers in this situation. Or they run into problems when the appraisal comes back short and the buyer balks on completing the deal; wasting everybody’s time in the process.
You don’t have to wait for cash buyers! You also don’t have to worry about an appraisal if you properly preface the situation with your contract negotiations!
The next time you find yourself in this situation, consider countering all offers with the following verbiage:
“If buyer’s lender bases loan terms on the lower of appraised value and contract sales price, buyer to bring additional funds into escrow as necessary to support appraised value as low as $______.”
HOW YOU CAN USE THIS:
- Let’s say you are listing a property for $500,000 (it's legitimate value).
- The only available comparable sales are three distressed properties that yield an average price of $475,000. Therefore, the property likely won’t appraise at the purchase price.
- You can counter any offers with the following: “If buyer’s lender bases loan terms on the lower of appraised value and contract sales price, buyer to bring additional funds into escrow as necessary to support appraised value as low as $475,000.”
- This way any buyers signing this counter know they will be expected to make up the difference.
- Everybody is well-prepared of the different possible scenarios. Everybody understands each other. And everybody wins without killing each other!
Contact us any time you would like to strategize on your contact offers...we’re happy to help provide perspective from the lending side!