2022 appears to be continuing to be a Seller’s Market.
When supply is low and demand is high, prices rise. That’s 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 appraisals.
In recent months, it’s become increasingly common for an appraisal to come in below the contract price on the house.
Buyers are often willing to pay over asking to secure the home of their dreams. If you’ve ever seen a house you’ve fallen in love with, you understand. Once you start to picture yourself and your furniture in the rooms, you want to do everything you can to buy this home, including putting in an offer over asking price to try to beat out other buyers.
When the appraiser comes in, they look at things a bit more objectively. Their job is to assess the inherent value of the home, so they’re going to study the facts.
The appraiser’s job is to remain an unbiased third party and to tell the buyer what that home is worth in the current market, compared to similar properties that have recently closed.
While homebuyers may be willing to pay more, appraisers are there to assess the market value of the home. Their goal is to make sure the lender isn’t loaning more money than the home is worth. It’s objective, rather than emotional.
Ultimately, knowledge is power. The best thing you can do is understand an appraisal gap may impact your transaction if you’re buying or selling. If you do 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 in price.
Buyers, be prepared to bring extra money to the table if you really want the home.
Above all else, have that conversation with your real estate agent. Whether you’re a buyer or seller, your REALTOR is your ally if you come up against an appraisal gap.
In today’s real estate market, it’s important to stay informed on the latest trends. Work with a one of our team members, to help you navigate an appraisal gap to get the best possible outcome.
The Doshier Team OBX Realty team members are here to help you – give us a call!