Low Appraisals Stall 23% of Home Sales

By
Mortgage and Lending with ChangeMyRate.com® A Mortgage Corporation NMLS #1326269

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

Comments (3)

Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Hello, Jacquie... it would be interesting to me to know how regional this is. I have not experienced this issue despite homes selling tens of thousands above list price. I had one home that under appraised by $5,000 for a VA loan... but for a home just under $500K, that was a small difference.

Oct 11, 2021 10:38 AM
Mark Don McInnes, Sandpoint-Idaho
Sandpoint Realty LLC - Sandpoint, ID
North Idaho Real Estate - 208-255.6227

We are not having so much the problem of value as just getting an appraiser out to the properties.  Appraisals by far and away are out bottleneck.  Good post with interesting info.  Mark

Oct 11, 2021 11:58 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Jackie, I have to agree with Nina, if the appraisal was going to come in low, our market has had language for the appraisal gap and no delays.

Oct 11, 2021 01:36 PM