Should I Pay Over Appraised Value For My Home?
/Dan Hubrich of Mountain View Mortgage is back and this month he’s explaining how to reconcile paying more than the appraised value for your home in this rapidly appreciating market.
This month I’d like to talk about how to navigate appraisals VS purchase price in this market. As I’m sure everyone knows, it’s a very competitive market right now and most homes are selling for over asking price and often times over appraised value. So what happens when you go under contract on a home and the price is higher than the appraisal? From a lending perspective, when this happens the borrower is required to come to closing with the normal down payment and closing costs PLUS the difference in price and appraisal. This is not a fun situation to be in of course BUT one question you should be asking yourself is “How much will it cost me if I DON’T buy right now?” I have several clients right now that backed out of deals a few months ago because they didn’t want to pay over appraised value and now they are kicking themselves because the home they passed on is worth much more than the price the seller was willing to sell for and now they are back on the hunt for another one. The thing to remember is that appraisals will always lag behind current sales prices for a couple of months. As homes close, then new comps are created and suddenly the same home you bought for over appraised value will now appraise for the price you paid. It’s a tricky market we are in for sure but it is what it is. Call me anytime with any lending questions you have and stay positive and patient in this market!