What Happens When a Property Doesn't Appraise?

With an upward moving market and sale prices rising, who determines the value of a home? Is it the seller? The buyer? The Realtor? If a buyer is willing to pay the price, the value must exist, right? Not always!

With home prices on the rise, we had to take a recent home buyer outside of his desired boundaries in order to find him a home within his desired budget. By doing so we did find him a top of the line home with good square footage and a custom pool with its own heating and cooling system! The home is decked out to the nines. Unfortunately the home is located in a desolate area with no matching homes to compare with it.

The appraiser called and canceled the appointment stating there were no comparable properties for him to go by. Even adding on dollars for the large square footage and the pool, we couldn't come up to the value the home was in contract for. 

Unfortunately the buyer is financing the purchase and isn't in the position to bring the extra money to the table to match the sales price. The seller will have to wait until prices rise even further or find a buyer with cash.

With rising home values, it's important for buyers, sellers, and Realtors to do some research and set reasonable expectations. I didn't foresee the appraisal being an issue with this home but the main reason it did have issues was because of it's location, the home is in an isolated area and is over-improved for the location with no like for like properties.  

I ended up finding the buyer a new listing that had just come on the market in his actual desired location so he is happy in the end. For the seller, well that's another story.

If you're financing your home purchase, the property must appraise.

Contact me direct at (760) 574-8486 for a pre-approval before you begin home shopping!