What Buyers and Sellers Need To Know About the Appraisal Gap

When Supply is Low and Demand is High Prices Rise! That's what has been going on in today's Real Estate Market. Home Prices are Appreciating at near record levels. This situation creates challenges when it comes to Home Appraisals.

In recent months, it has become increasingly common for an Appraisal to come in below the Contract Price on the House. This difference in the Appraisal Value and the Contract Price is known as "The Appraisal Gap".

Why Does an Appraisal Gap Happen?

When the Buyer Demand is much higher than the available Properties, Buyers are often willing to pay over asking price to secure the Home of their Dreams. Once you start to picture yourself and your furniture in the rooms, your emotions kick in and you want to do everything you can to get the property, including putting in a High Offer to beat out the other Potential Buyers.

When the Appraiser comes in, they look at things a bit more Objectively. Their job is to access the Value of the Home, so they are going to study the Facts. The Appraiser is to remain an Unbiased Third Party and truly tell the Client what the Home is Worth in the Current Market. The Appraisers goal is to make sure the Lender isn't loaning more money than the Home is Worth. It's Objective, rather than Emotional. The Appraiser is basically working for the Lender.

In a Highly Competitive Market like Today's, having a Discrepancy between the two numbers is common. Most Sellers will not lower their Asking Price. There is always a Buyer out there willing to pay the difference in Cash. Buyers, be prepared to bring extra money to the table if you really want the Home.

As a Buyer or Seller, always choose a Real Estate Agent who has Negotiating Skills and who knows the Local Market. If you are ready to Buy or Sell, let me put my Negotiation Skills to work for you. Guaranteed to Save you $Thousands when you Sell Your Home with Me.