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.
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