Beware of the "spaghetti method" of making an offer
This is proof that the world has gone mad.
The latest trend in making an offer on a home for sale in this market is to use what I call the “spaghetti method.” In other words, lets just throw out a ridiculous price against the wall and see if it sticks.
The theory goes that the true market value of the property will be realized when the appraiser turns in his report and that’s the price the buyer will pay.
You’ll likely have better results by going to a roulette table in Vegas and placing all of your life savings on 24 Black.
There are several ways this could go wrong and here’s the worst.
The home appraises for the ridiculous price you offered.
Don’t think it can’t happen because I’ve already witnessed it twice.
That would mean that you just significantly overpaid for a home during the highest peak for prices in the history of Nashville.
What happens when you need to move in a few years and you can’t because you are upside down in your home? Or you have to come to the closing table with a check in hand.
If you don’t think this is real, just talk to anyone that bought during the peak ten years ago.
None of us plan to move in a few years when buying a home, but it happens due to job changes and life.
Let’s look at another scenario.
Let’s say the appraisal comes back and it is less than the price you offered. I know what you are thinking. This is great news!
The seller is not required to accept the value provided by the appraiser as the new sales price. If you cannot come to an agreement with the seller on the price of the home, the contract will be terminated.
In addition to starting over at square one, you will have lost time and any money invested in the appraisal and inspection.
There is a better strategy. One that protects your downside, while giving you the best opportunity to get the home you want.
Wanna hear more? Just hit reply and we can talk about what works best for you.