Buyer Success Story: Winning Bid Strategy for Their Dream Home

I met Bob and Fran (not their real names) a few years ago during the covid years.  They had been renting an apartment for many years and decided they were ready to buy a home.    They had found me through an internet website and started emailing me for many months before we met in person. 

The year was 2021, and we were amid the covid 19 pandemic.  Real estate was very interesting back then.  There were so many buyers fleeing the cities, out of apartment buildings, looking for homes with yards.  Bob and Fran were two of them. 

When we finally met, we had a quick consultation, found out their needs and desires for their dream home.  We also strategized their budget.  They have been saving a long time, had good jobs and solid credit.  They also had a good downpayment, which is very helpful in a competitive buyer-bidding environment. 

We started our homebuying adventure, looking at homes.  There were not many on the market, so competition was fierce.  I had “trained” them as soon as they saw a house they liked, they HAD to submit their highest and best offer right away to have a shot at winning the home.   We even went to open houses, and they had a long line outside for people waiting to get in.  Only a small amount of people can get in at a time – just like going to a selective club!  Wow! 

Bob and Fran submitted offer after offer throughout different areas of south Jersey.  After losing out on a few homes, I recommended to them that they include some money for an “appraisal gap” in their offer.  An appraisal gap is additional money the buyer can put down to cover the difference between their mortgage company’s appraisal value and the contract sale price of the home.  During any transaction that is using a mortgage, an appraiser will be sent out to the property to determine the current value of the home.  This is for the mortgage company to make sure that the amount of money that is being borrowed will at least match the current value of the home.  This is to protect the bank and their asset – they don’t want to lend the money for a home that does not have value. 

Because there were so many bidding wars and buyers paying way over the asking price, the appraisals weren’t catching up to meet the price buyers were willing to pay.   So, the difference between the appraisal and the agreed contract price is an appraisal gap.   The appraised value will not be known until buyers are well into the transaction and heading towards closing.

If the appraised value is less than the contract price, the amount that the buyer proposes to pay towards the gap will look more attractive to the seller.   If that were to happen, then the final contract sale price will be appraised value plus proposed dollars from the buyer.  For example, if the initial contract sale price is $300K, the appraised value is $275K, and the buyer proposed $5K towards the gap, then the final contract sales price will be $280K. 

For Bob and Fran, once the seller saw that they were putting down additional money for the appraisal gap, they took their bid – after they had accepted another offer that fell thru!   It turns out the appraisal did come in lower than their accepted offer, so they ended up closing for less than their initial offer and the seller was happy!  It was a win – win for all parties. 

After closing, Bob and Fran moved in loved their dream house and started a family creating many happy memories!  They even sent me flowers and a beautiful letter thanking them for helping them get their “dream home”!

If you want to find out more about buying your dream home or know someone that is, feel free to email me ccr@ccrsellsrealestate.com or click below to get started.  Let’s explore this option and see if it is right for you!  😉