Appraisal contingencies and gap limits

Video transcript

Good morning. So I’m here at Cedar Beach again. And if you look really closely, you might be able to see Connecticut. I want to talk to you a little bit about purchasing a home with a mortgage and how to make your offer almost as good as cash. So the best way to do it is to waive the appraisal contingency completely.

And that means that if the appraisal comes in lower than the contract price, you agree to pay the difference, whatever that difference may be. The second best option is to agree to an appraisal gap limit. And what that does is if you agree to, let’s say, a $10,000 appraisal gap limit and you go into contract on a home at 600,000.

If the appraisal comes in at 580, you’ve agreed to pay $10,000 in cash to fill that gap. Not the whole gap, just up to that limit amount. So 580 plus five, 95, 80 plus the $10,000 appraisal gap limit. You will close a 590 and the seller agrees to accept that.