Thursday, October 21, 2021 / by Flr Team
When supply is low and demand is high, prices naturally rise. That is exactly what’s happening in today’s housing market. Home prices are appreciating at near-historic rates, and that’s creating some challenges when it comes to home appraisals.
In the last couple of months, it has become increasingly common for an appraisal to come in below contract price on the home. Why is that?
With the heightened buyer demand, purchasers are often willing to pay over asking to secure their dream home. If you ever toured a home and have fallen in love with it, you understand. Once you start to picture yourself and your furniture in the rooms, you want to do everything you can to land the property, including putting in a high offer to try to beat out other potential buyers.
When the appraiser comes through, they look at the home a bit more objectively. Their job is to assess the inherent value of the home to make sure the lender isn’t lending more money than the home is worth.
What does this mean for you?
Knowledge is power. The best thing you can do is understand that there is an appraisal gap that may impact your transaction if you are buying or selling. If you do not encounter an appraisal below your contract price, know that in today’s seller’s market, the most common approach is for the seller to ask the buyer to make up the difference. Therefore, buyers should be prepared to bring extra money to the table if they really want that home.
Bottom line, in today’s real estate market, it is important to stay informed on the latest trends. Work with a trusted Real Estate professional from Florida Lifestyle Realty to help navigate you through the appraisal process to get the best possible outcome!
Florida Lifestyle Realty