Avoiding Appraisal Minefields

We may be small, but we’re slow.

–Cal Tech football team slogan

Once upon a time, when the credit spigots were wide open, Buyers’ financing didn’t much matter to Sellers:  at closing, they received cash.



With fewer, strong Buyers out there, tighter credit, and more appraisal minefields to navigate, there is a strong — even exaggerated — stratification amongst different types of Buyers’ offers.

Here’s the hierarchy, in order of desirability from a Seller’s perspective:

Best:  Cash
Good:  Financed, with 20% down (the more down, the less risk of appraisal problems)
Acceptable:  Financed, with a small(er) downpayment.
Contingent:  Hey, it’s a start — and it may attract other offers!

Different Financing . . . Different Prices

To entice Sellers to accept a contingent offer — that is, one where the Buyer must first sell their current home — Sellers typically require some compensating enticement.

Surprise, surprise . . . . that enticement is usually a higher price.

How much higher?

The rule of thumb amongst Twin Cities Realtors these days is anywhere from 6% to 8% (an offer that is contingent and low is a non-starter). 

Conversely, that means that cash buyers can expect to get a hefty discount, perhaps as much as 10% now.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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