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Appraisal | Country Real Estate Blog

Monday, December 27, 2021   /   by Sarai Diaz

Understanding the Appraisal Gap

What is appraisal gap and appraisal gap coverage? This is stuff that we don't talk about in real estate all the time, but in this a very competitive market and this is coming up on a lot of offers and this might be the reason why you're not writing a strong enough offer to get the house that you want. So we're going to use really simple numbers today and we're going to use really basic loan structures.

We're going to use a $100,000 offer (which as you know in this market really doesn't exist) and we'll talk about a loan that is an 80/20 loan.

So, this is a 80% loan to value 20% is the down payment. This is pretty standard in a conventional loan. In that situation, the buyer would need to bring $20,000 down to buy a $100,000 house, and the bank would lend them the $80,000. The purpose of the appraisal is for the bank to establish the value of the home, because we have to remember, banks are taking a risk by  lending you money. So, they have to assume that you're going to de. ...

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  tehachapi, real estate, realtors, broker, loans, appraisal, bank loans, home loans, offers on a house

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