submitted by Colleen Evanchick, Remax Royale
One of the issues that has arisen with the strong housing market is appraisals. Buyers are paying over full price for homes and if they don’t appraise at the sales price, then what happens?
Various solutions (or sometimes no solution). For instance, let’s say the sales price is $500,000 and the home appraises at $475,000.
Appraisers use the last six month’s sales in the same community or nearby surrounding areas, and if there are no homes to support the price, then the buyer and seller can compromise and perhaps meet in the middle, or the buyer has to come up with more money to keep their loan to value ratio, in other words, if they are planning on putting 20% down, then they need more money.
Many buyers are actually waiving the appraisal to get their offer accepted.
At Re/Max Royale, we do caution sellers and buyers that the home may not appraise, so that they know up front should this issue arise.
In the meantime, houses keep selling and the prices keep rising!