I am currently in process of buying my first home. House was listed at $329500. I included escalatory clause in my offer and got the offer at $336000. Seller asked me cover the appraisal gap, if any. I offered to cover $5000. Here is the language they included in the contract.
Now the home appraised at $325K.
How do you interpret the above language? Does it mean that I am bound to pay $5K above appraised value? Or does it mean I still have an option to choose if I want to pay 0 - $5000K or walk away?
I am just trying to understand what kind of leverage I have to negotiate this further.
@Trushit Vaishnav I read that to say that because the property appraised at less than $336,000, you agreed to pay $330,000 - assuming that you've signed the contract. It appears that you saved $6,000 from your offer of $336,000.
My bet is that the seller/seller's agent knew it wouldn't appraise at $336,000. They used that clause to squeeze out as much as they could.
Did they present the competitive offer for verification? That's a key part of a well written escalation clause.
The other question is whether you really want to pay $5,000 above market value. In a very hot seller's market, you probably do - but it's worth considering.
Youve agreed to pay $5k above the appraisal, so at a minimum you are bound to pay $330k for the house if the seller is willing to drop the price to that.
It’s clear....you Already agreed to pay $5k over appraisal.