All across Massachusetts, prospective home buyers are eagerly waiting for new houses to become available for purchase. With the current market unable to support the number of people interested in purchasing homes, sellers are taking note of rising real estate sale prices and buyer competition and throwing their houses into the market.
This increased interest in transacting in the real estate market has produced several market-related side effects that include the need for many real estate transaction participants to engage in the appraisal process. Home appraisals involve a review of a home’s physical space and a valuation of its true market worth. When a home fails to appraise for the amount of money that a buyer has offered, banks and other lending organizations may not fund the full loan amount since the home’s technical appraised value does not meet the loan amount.
Experts note that appraisers working in the current market also have several challenges that did not exist in the past. First, since few houses have been available for sale during the last year, appraisers have very few comparable homes to consider in selecting an appropriate appraisal amount. Second, appraisers also face difficulties of valuing homes when prices are rising and often undervalue homes, creating problems for buyers and their potential mortgage lenders.
While many homeowners hope that the transfer of their properties to buyers is a smooth process, appraisals can throw wrenches into transactions that seemed guaranteed to successfully close. Only dealing with buyers who can pay cash is one way to avoid having to engage the services of an appraiser, though with prices soaring not all sellers will be able to find buyers with sufficient money to outright buy their houses.
Source:Â Norwalk Reflector, “Tips for selling your home in a rising market,” Monte Mohr, July 16, 2013