Will A Home Always Sell For The Offer Price? 2 Ways The Price Can Drop
The home buying process starts by making an offer to the seller. A home does not always sell for the asking price though. An offer can be higher or lower because of multiple offers or due to the home being on the market for a while without an offer. That said, even if the buyer makes an offer, it is not guaranteed that the home will sell for that price when all the paperwork is finished. Here are 2 ways the home can drop in value.
If a buyer needs to get a mortgage to purchase their home, part of the process is that the lender will require an appraisal of the property. This is done for a couple of reasons. The bank technically owns the property until the mortgage is paid off, so they want to know what the property is worth in case the buyer defaults on their mortgage. A lender will also want to make sure that the price is the fair market value. If the buyer made an offer that is $100,000 more than what a house really is worth, a lender doesn't want to get stuck with a foreclosed property that has much more owed on it than what it is worth.
So unless the buyer has cash, a mortgage will be necessary to finance the house. If one buyer is unable to get a loan at an inflated price, another buyer will run into the same problem when their appraisal is done. The lower appraisal can actually be used as leverage to lower the price to one that is closer to the appraisal value.
The inspection of the home can also play into the final cost of the home. If the seller has an inspection done and they discover many problems with the home that have to be fixed, they can request that these items are fixed or that the price is lowered accordingly. Either way, it is less money in the pocket of the seller.
While this is an item that the seller has more control over in negotiations, the seller also knows that another buyer will find the exact same problems with the home. The seller's options are to negotiate with the current buyer or lose time by listing the home again and finding a new buyer.
Thankfully, a real estate agent can help with negotiations. As a buyer or seller, they will help get you the best deal possible.