In an article from Keeping Matters Current, today’s real estate market, low inventory and high demand are driving up home prices. As many as 54% of homes are getting offers over the listing price, based on the latest Realtors Confidence Index from the National Association of Realtors (NAR) and CoreLogic. In this hot DFW real estate market, appraisal gaps are something to be aware of and GoalLine Real Estate can help you understand this intricacy.
“The frequency of buyers being willing to pay more than the market data supports is increasing,” states CoreLogic’s Chief Appraiser. Beth Brake of GoalLine Real Estate says, “I can attest to this, but, this is just a small part of the entire process,” and if you rely on her expertise she’ll guide you through.
While this is great news for today’s sellers, it can be tricky to navigate if the price of your contract doesn’t match up with the appraisal for the house. It’s called an appraisal gap, and it’s happening more in today’s market than ever before.
According to recent data from CoreLogic, 19% of homes had their appraised value come in below the contract price in April of this year. That’s more than double the percentage in each of the two previous Aprils. In May of 2020, 18% of home sales were delayed by the appraisal gap as compared to now 26% in May 2021. Termination rates due to appraisal gaps were 6% last year and now are at 13% according to NAR.
If an appraisal comes in below the contract price, the buyer’s lender won’t loan them more than the house’s appraised value. That means there’s going to be a gap between the amount of loan the buyer can secure and the contract price on the house.
In this situation, both the buyer and seller have a vested interest in making sure the sale moves forward with little to no delay. The seller will want to make sure the deal closes, and the buyer won’t want to risk losing the home, especially in this red hot DFW market. That’s why it’s common for sellers to ask the buyer to make up the difference themselves in today’s competitive market.
Whether you’re buying or selling, your real estate agent is your ally! Beth Brake and Mindy Short can help you throughout the process and are there to help you navigate the unexpected appraisal gaps, contracts and “bumps in the road.” With Beth’s contract expertise and Mindy’s buyer expertise, you are in good hands.
Beth Brake REALTOR®
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