Posts Tagged ‘home buyer’

5 Things to Try When Buyer’s Appraisal Comes in Low

Friday, March 3rd, 2017

Home buyers these days have many hurdles to jump through in order to finally purchase a new home, from finding a home, to making an offer in possible multiple offer situations, to actually getting to closing without other issues. One such issue is appraisal – with inventory so low and prices climbing to meet demand it is not out of the ordinary for an appraisal to come in on the low side. But have no fear – there are a few things you can do to keep the sale moving along.

1. Renegotiate price/ compromise. If the home does not appraise there is always an opportunity to renegotiate price with the seller. Either the price can be negotiated down to the appraisal price, or the buyer and seller can agree on a compromise (for example, if the appraisal comes in $10,000 under contract price the parties can split the difference – buyer pays $5,000 more in cash and seller lowers the price by $5,000). However, if the seller had multiple offers there may be another buyer willing to pay that high price just to get into contract, so sometimes a seller will not renegotiate. It is always worth a try though, because if the other potential buyers are getting loans the seller could wind up in the same position.

2. Pay the difference with cash. Lenders are only concerned with the appraisal only because it affects the borrower’s loan-to-value ratio. The lender will only make a loan based on the contractual amount or appraised value.

3. Seller can carry a second loan. If you cannot lower the price and the buyer cannot pay cash over appraisal value, the seller can offer to carry a small second loan to make up the difference. The problem with this is that often the interest rate is higher than normal, but you can negotiate with the seller

4. Challenge the appraisal and ask for another to be ordered. Depending on the type of loan the buyer is obtaining this can be a possibility. If there is a good reason to challenge the appraisal with a conventional loan, say the appraiser was from out of the area or did not know the reasons why comparable properties sold for different prices (maybe your home is highly upgraded or has a better lot or view, etc.), then the appraisal can be challenged and you can ask for a second appraisal. Make sure that you provide comparables and an analysis of their sales to the new appraiser or to the lender – a job that the listing agent should have done (but even if s/he did there could still be other issues that did not bring in the appraisal value to the contract price). Talk to your agent and mortgage professional and figure out a plan that works best.

5. Cancel the sale. If there are no other options available the buyer has the right to cancel the sale without losing any deposits (unless otherwise agreed in the contract).

The bottom line is that there are potential solutions if your appraisal does not come in at contract value, so don’t panic. Make a plan with your agent and mortgage professional and see what you can do. Most of the time there will be a valid solution.

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Should I Buy/Sell Real Estate Now, or Wait Until Spring?

Monday, November 30th, 2015

Winter is a busy time of year for people – the holidays are here and there are so many things to accomplish before the end of the year. You may wonder how people think about real estate at such a busy time, but believe me they do! Many wonder whether it is a “good”time to buy or sell a home now, so here are some things to consider. house_question

Buying a Home at the End of the Year

1.  Less inventory to peruse. There is typically less inventory to see at this time of year, as busy homeowners focus on holidays and accordingly wait to sell or take their homes off the market.

2. Serious sellers could = lower prices. Those who do have their homes on the market need or want to sell, and are not deterred by the holidays and slower traffic. This is a great situation for buyers, as they may be able to negotiate better prices.

3. Less Competition. With fewer buyers out looking at homes it makes it a great time to be a buyer.

Selling a Home at the End of the Year

1.  Less competition inventory. There are typically fewer homes on the market during the winter/holiday season, so it is a great time to market your home.

2.  More serious buyers. Unlike summertime, when there seem to be a lot of “looky-loos,(especially if you live in a beautiful area like San Diego where there are a lot of summer tourists) ” buyers out looking at homes at this time of year tend to be more serious and ready to purchase.

Buying a Home in the Spring/Summer

Buyers who wait until Spring to start their home searches tend to encounter:

1.More inventory to choose from

2. More buyer traffic, which could mean more competition and multiple offer situations

3. Prices tend to be higher

4. Shorter market times, which means less time to really look around and make a decision.

Selling a Home in the Spring/Summer

1. More inventory on the market, thus more competition

2. Prices tend to be higher

3. A larger buyer pool

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The best time for you purchase a home will depend on many things. Make sure also to check with your accountant to see if there are any benefits for you that could affect your purchase window.  Whenever you decide to purchase, make sure you do your homework and contact an experienced agent to assist you. Happy shopping!

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