Avoiding a Low Appraisal

April 11, 2017 By , ,

In this upcoming spring housing market, home buying is growing even more competitive. Rising home values and a lack of inventory in some markets are setting sellers up to receive competing offers, which can cause added complications and stress for your borrower.

One of these complications is the recent trend of properties appraising below the agreed upon sales price. But you can help your client in avoiding a low appraisal by keeping the following in mind:

Don’t Give In to Temptation

It’s easy in the heat of negotiation to offer far above asking price if your client has the capacity and willingness to do so; everyone wants to be the easy choice for a seller with a ton of offers. However, this may have negative consequences down the line if your borrower will be obtaining a mortgage. The property serves as collateral for your borrower’s home loan, so the appraisal must be able to support the value of the property.

Ask Yourself A Few Questions

Before you pull the trigger and offer more than asking price, ask yourself if the property is really worth it:

  • Is it in good enough condition or in a popular enough area to warrant the higher cost?
  • Can this value really be substantiated?
  • Are similar houses to this one, which have recently sold, gone for a comparable price, or for less?

These are all questions which the appraiser will ask, so do your client a favor and consider them yourself before you encourage your buyer to enter into contract.

Avoiding a Low Appraisal

If you have more questions on appraisals in the current marketplace, or what to do in the event of a low appraisal, contact us! We are here to lend our expertise in all of your mortgage financing needs.

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