Home buyers are bidding up home prices in competing for the home they want. But appraisals don’t always agree with that final seller’s accepted offer price. Some homes are appraised below the agreed-upon sales price, which could upend a deal.
Twenty-three percent of contracts were delayed due to appraisal issues, according to the latest REALTORS® Confidence Index Survey, based on a survey of real estate professionals’ transactions. About 12% of transactions were then terminated due to appraisal issues.
“I don’t remember any time where the frequency of buyers being willing to pay so much more than the market data was this high,” Shawn Telford, chief appraiser at CoreLogic, told The Wall Street Journal.
Buyers are stretching their budgets to win a bidding war. But mortgage lenders will usually only offer a loan amount for the appraised value of a home. When a home appraises too low, parties must come back to the negotiation table. Sellers may need to agree to lower the price or buyers may have to come up with more money on their own. Or the deal may fall through.
To learn more about low appraisals and the home buying process, visit the SCOOP! Blog
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