12% of Home Sales Fell Apart

12% of Home Sales Fell Apart

According to The National Association of Realtors Confidence Index Survey,  appraisal issues delayed 23% of all sales, and 12% of home sales fell apart as the buyer and lender could not resolve the appraisal problem.

Realty Biz News said, “As competition for limited housing inventory intensifies, buyers are bidding up home prices. But many have found that the tactic of making an aggressive bid to beat out other offers backfires, as the appraised value of the home falls well below the agreed price.”

 “I don’t remember any time when the frequency of buyers being willing to pay so much more than the market data was this high,” said CoreLogic’s chief appraised Shawn Telford in an interview with the Wall Street Journal.

With existing home inventories at record lows, bidding wars among buyers have become extremely common over the last year. As a result, many prospective buyers are stretching their budgets to the max in desperation to buy a home, which often means they bid well over the odds for the home they desire.

12% of Home Sales Fell Apart

While that may get the seller’s attention, it can be an issue if the buyer needs to secure financing to fund the purchase. Mortgage lenders will typically only lend the amount to cover the appraised value of the home instead of what the buyer might think it’s worth.

So, once a seller accepts the bid, the mortgage company will send an appraiser to go and value the home. If the homes’ appraised value comes in lower than what the buyer is offering, the mortgage company won’t provide the financing as it considers the loan too risky. In that case, the parties need to renegotiate – but if the seller doesn’t agree to a lower price, the buyer must come up with the extra cash, or else the deal falls through.

The Job of Appraisers

Appraisers typically factor in comparables such as recent closed and pending home sales of similar properties in the area to determine a home’s value. But sales can take as long as two months to close after going under contract, and during that time, prices can move up or down fast. As a result, some sellers complain that appraisals aren’t keeping pace with the rapid price growth seen in many U.S. markets today.

To deal with low appraised values, some buyers waive the appraisal contingency -essentially, they’re promising they’ll make up whatever the difference is in cash.

If You Are a Seller

Styl Properties, Inc. 

is here to help homeowners out of any distressed situation.  We can make a cash offer on your house. There is no need for an appraisal. You choose the close date, and there are no fees, upfront costs, commissions, or anything else.

As investors, we are in business to make a modest profit on any deal. So we offer the simple truth about your home and how we can help you sell it fast.

Give us a ring. We would love to help you understand the process and to answer all of your questions. You can reach us at 402 999.0577

Leave a Reply

Your email address will not be published. Required fields are marked *