{"id":9958,"date":"2012-06-23T20:35:55","date_gmt":"2012-06-24T01:35:55","guid":{"rendered":"http:\/\/thelehighacresgazette.com\/news\/?p=9958"},"modified":"2012-06-23T20:35:55","modified_gmt":"2012-06-24T01:35:55","slug":"will-a-low-appraisal-end-your-home-purchase-transaction","status":"publish","type":"post","link":"https:\/\/thelehighacresgazette.com\/news\/2012\/06\/will-a-low-appraisal-end-your-home-purchase-transaction\/","title":{"rendered":"Will A Low Appraisal End Your Home Purchase Transaction?"},"content":{"rendered":"

By Deborah A. Ten Brink<\/strong><\/h4>\n

Will A Low Appraisal End Your Home Purchase Transaction? \u00a0Part 2<\/p>\n

\"\"<\/a>In Part 1, \u201cWill A Low Appraisal End Your Home Purchase Transaction?\u201d, we learned that the appraisal process is important to you, the buyer, and the lender but for different reasons. You want a loan commitment from your lender so that the home-buying process can proceed to closing and the lender wants to make sure that their risk (in providing you with financing) is low and their return is solid. If they need to sell quickly because you defaulted on your loan, they want to know what they’ll get for your property. They will want to liquidate fast.<\/p>\n

Low appraisals are something we all have to deal with in any market! In my previous post, \u201cOptimism Is Rising Along With Sales In Lehigh Acres\u201d), I showed you how to tell if your local market is a buyer’s or seller’s market.\u00a0 When the market is a seller’s market like it is right now in Lehigh Acres, it is fairly common to see multiple-offer situations. This is exciting for sellers, but it often drives up sales prices so that they are higher than comparable properties in the local area. Once a seller understands this, they start to become very concerned; will their home appraise for the sales price on their contract? This then becomes a concern for both the seller and the buyer.<\/p>\n

Even if you find yourself in a buyer’s market, (this means there is a lot of inventory for a buyer to choose from), sellers have cause for concern because prices will start to fall downward because fewer buyers are out shopping.<\/p>\n

Some Reasons Low Appraisals Can Happen:<\/p>\n

\u2022 Multiple-offer situations where sales prices become artificially inflated.<\/p>\n

\u2022 A buyer’s market where there is a large inventory of homes on the market and fewer buyers are buying.<\/p>\n

\u2022 Unrealistic seller who refuses to offer their home at a realistic market price (where they price their home too high).<\/p>\n

\u2022 Believe it or not, an appraiser can be the issue. Sometimes they overlook \u201cpending\u201d sales data (homes that have recently gone under contract) that could reflect higher sales from comparable properties when they close. Or, maybe the comparable properties were not true comps. Maybe the appraiser is comparing apples to oranges.<\/p>\n

\u2022 With our local market, we have fallout from too many foreclosures and short sales being in the neighborhoods; (especially if there are no other true comps with which to compare your home). Lenders typically like comps within 1 mile. I owned a home where it was outlying. The appraiser had to go out 3 miles. Lenders don’t like that but we didn’t live in a subdivision cookie-cutter home. This can be a challenge.<\/p>\n

\u2022 If the sales contract states that the seller is giving the buyer part of their equity incash at closing, the lender may feel that the home is overpriced. This can cause the lender to not want to do the deal or the underwriter to inaccurately evaluate the property’s value.<\/p>\n

Here is a quote from the National Association of REALTORS\u00ae March 21, 2012 news release, \u201cFifty-one percent of NAR members report that contracts settled on time in February, 18percent had delays and 31 percent experienced contract failures; the cancellation rate was33 percent in January and 9 percent in February 2011. Contract failures are commonly caused by declined mortgage applications and failures in loan underwriting from appraisals coming in below the negotiated price.\u201d<\/p>\n

Lawrence Yun, NAR chief economist continued by saying, \u201cMany buyers are staying in the market after experiencing a contract failure and making an offer on another property, showing their determination to take advantage of the favorable conditions, but the cancellations are contributing to an uneven sales pattern.\u201d<\/p>\n

Appraisals are largely based on prices buyers were recently willing to pay for comparable local properties.\u00a0 With all of the short sale and foreclosure sales going on, finding true comparable properties has been a challenge. We are now seeing dual price structures; one for \u201cnormal resale residential\u201d properties, and another for \u201cdistressed sales.\u201d My next post will be the final post on what some possible solutions are to save your transaction when you find yourself in a low appraisal situation.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Deborah A. Ten Brink Will A Low Appraisal End Your Home Purchase Transaction? \u00a0Part 2 In Part 1, \u201cWill A Low Appraisal End Your Home Purchase Transaction?\u201d, we learned… <\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[103],"tags":[],"_links":{"self":[{"href":"https:\/\/thelehighacresgazette.com\/news\/wp-json\/wp\/v2\/posts\/9958"}],"collection":[{"href":"https:\/\/thelehighacresgazette.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thelehighacresgazette.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thelehighacresgazette.com\/news\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/thelehighacresgazette.com\/news\/wp-json\/wp\/v2\/comments?post=9958"}],"version-history":[{"count":0,"href":"https:\/\/thelehighacresgazette.com\/news\/wp-json\/wp\/v2\/posts\/9958\/revisions"}],"wp:attachment":[{"href":"https:\/\/thelehighacresgazette.com\/news\/wp-json\/wp\/v2\/media?parent=9958"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thelehighacresgazette.com\/news\/wp-json\/wp\/v2\/categories?post=9958"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thelehighacresgazette.com\/news\/wp-json\/wp\/v2\/tags?post=9958"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}