How much money do buyers need to bring to the closing table when offering over the list price?
These are some crazy times in North Texas when it comes to buying a home. Many buyers are struggling to get a home under contract. Once they do secure a home, buyers must come to terms with the amount of money required to close the deal.
Education on the seller's market...
The number one task I make sure to complete when meeting with a buyer for the first time is to discuss the data on the current market. I will run analytics on current housing trends for my clients using their target area and price point.
It is important for buyers to understand these data points:
- Median days on market - how quickly do they need to respond
- Average list to sales price ratio - the minimum amount to offer over listing price
- Maximum list to sales price ratio - a realistic expectation of what it will cost to get a home
- Closing and transaction costs - how much they NEED to have and how much EXTRA money they have to make strong offers
- Appraisal gap - what it means for lenders making loans on homes where the contract price is greater than the current value of the property
The Appraisal Gap
The appraisal gap is something most buyers are struggling with these days. Many believe that as long as the price they offer on a home is within the amount they have been pre-approved to purchase they can make offers for over the listing price.
However, lenders will not give loans for amounts greater than the home is worth. Therefore, if there is a gap between the amount of the purchase price and the value of the home, the buyer is responsible to provide those funds at closing.
Every Market Has Complications
This is just one of the complexities in today's market. This is why you need a REALTOR® on your side that understands what it takes to purchase a home. I will make sure you are prepared and know your limits when making offers. Contact me today to get started making your dream home purchase a reality.