Why Sellers Don’t Care About Their Appraisal

If you’ve been on the market looking for homes for more than an hour, you’ve likely quickly realized that the housing market has changed once again. Where previously there was a superfluous number of bank repos and short sales, the market landscape is now comparatively sterile and there are fewer and fewer to choose from. Talk to any real estate agent and you are likely to hear stories of properties with 15, 30, or even 100 offers being received on a home in a matter of days. In terms of the familiar supply and demand model, demand currently far exceeds the supply of homes in the Inland Empire.

There are a number of circumstances that may partly explain why demand remains so high. Historically low interest rates, lack of new home developments, hedge fund purchases and investors, just to name a few. Many homebuyers are quickly discovering that the home they find and want to buy not only has another 10 deals in a few days, but many of these deals are above full and cash price.

With many homes selling for several thousand over full price, sellers have become wise with the tactic whereby a buyer accepts a higher price only to return weeks later asking for a price reduction as a result of a lower appraisal. . In response to this, many of the offers are currently being negotiated to hold the buyer responsible for the difference between the agreed purchase price and their lender’s appraisal. In practice, this strategy allows the seller to maximize his selling price. The flip side of this is that it makes it very difficult for a first-time buyer with limited capital to get a foot in the door.

As an example, a house is listed at $ 200,000 and you receive 10 offers. The seller agrees to sell the home to a buyer financed for $ 215,000 with no appraisal contingency. When the appraisal reaches a value of just $ 200,000, the buyer is now responsible for paying the difference of $ 15,000 in cash.

Another factor to consider is that many homes are sold BEFORE you hit the local Multiple Listing Service and one of the best ways to buy a home is to work with a top agent who is connected with other brokers. What this means is that you may end up getting your next home not because of the offer price, qualifications, or how quickly you submit your offer, but rather because of the RELATIONSHIP your broker has with other brokers, allowing you to know the house before. hits the market.

Even with the challenges of finding a good home, the reality is that now is a good time to buy and also a good time to sell.