It ain't worth it!

By
Real Estate Agent with Atlanta Communities 303302

Ok, so I started out with bad English, but this is what a seller hears when the appraisal on their home comes back below the contracted price. What happens then? Well, we start with anger on the part of the seller and their agent.

I just had this happen with a listing. The appraiser decided that the contract price, the price that not only the winning buyer settled on, but a bunch of other full price or better offerers sent in, was too high, by about $9,000.

As prices for homes skyrocket the appraisers seem to be having a hard time keeping up. They usually look at comps between 30 and 90 days back to make the recommendations. In a normal market, prices 30-90 days back would be consistent with current pricing. In a market where prices are increasing quickly, the older data becomes woefully low, and we get appraisals that fall below current market values.

This can cause a drag on market prices, forcing them to rise slower than they might otherwise do. So, what does a seller do? Negotiate. Trim a bit off of the seller paid closing costs, see if the buyer can afford to come out of pocket with more cash since the appraisal value will limit their loan amount.

Want to know more about this issue? Give us a call.

Posted by

Peter den Boer, Associate Broker, Realtor

Atlanta Communities Real estate Brokerage

 

Ph. 770.713.1545

www.denboerhomes.com

 

I write about daily life as a Realtor in the Towne Lake Community in Woodstock Georgia.

Comments (6)

Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Peter den Boer - we can see this happening and in some markets more than others.

Jan 22, 2021 06:16 AM
Rocky Dickerson
Realty One Group - Las Vegas, NV
Superior Service!

Good morning Peter den Boer yes, after what happened in '06 to '10, many appraisers are extra cautious. Perhaps too much.

Jan 22, 2021 06:42 AM
Joseph Domino 480-390-6011
HomeSmart - Scottsdale, AZ
Real Estate Made Easy

The Phoenix market is so hot that buyers bid up the price. This often backfires when they hear " It ain't worth it!"

Jan 22, 2021 07:03 AM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Peter,

I can only imagine that this does cause major problems.  Wishing you a solution sooner than later. A

Jan 22, 2021 07:13 AM
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Hi Peter,
Yes, historical data is a big part of bank requirements for an appraisal. The all-cash sales and high down payment sales can skew market value. I'm in favor of whatever can get skyrocketing prices in check.

Jan 22, 2021 07:18 AM
Barbara Todaro
RE/MAX Executive Realty - Retired - Franklin, MA
Previously Affiliated with The Todaro Team

Good morning, Peter den Boer you could request another appraisal by someone who is familiar with the marketplace.... appraising is not an exact science....there are variables.... three appraisals rarely come out to the same number....

Jan 22, 2021 07:59 AM

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?