APPRAISAL...Real Estate's New Dirty Word?

Cheers Leonardo! I'll drink to that! ;)

Appraisals are not a new thing & they're not really a dirty word either but they are certainly striking fear in the hearts & minds of Buyers & Sellers alike these days!

That goes double for us REALTORS® too as we try to advise these Buyers & Sellers....

As a Buyer, if you offer to pay too much, then you run the risk of the house not appraising & having to come up with the difference between what you promised to pay & what your Lender is willing to loan you on the property.

If you're a Seller who's just been offered a big boatload of money for your home, before you ask where to sign, make sure you ask about the Buyer's ability to cover any shortfalls
should the appraisal not match the offer price. How much of a deposit are they putting down? How much of a downpayment? Will it be a conventional mortgage (20% down) or a high ratio mortgage with less than 20% down that will need to both appraise AND be approved by 1 of the 3 Mortgage Insurers here in Canada, against payment default.

In 2015's HOT spring market, everyone is trying to cover their ASSets! Apparently Lenders will only accept the MOST recent comparables (3mos or less) & if they aren't available (& sometimes they're not - due to the ongoing low inventory problem) then appraisals are coming in low. Appraisers work for the Lenders so they need to follow their guidelines...My Mortgage Broker was just telling me about 3 recent deals he worked on that didn't close, or the closing was delayed, because of appraisal issues & the Buyers having to try to make up the difference...sometimes to the tune of 10's of thousands of dollars! Think of the domino effect of a property not many other deals are put in jeopardy as a result?

And then you've got a situation like I had last night...6 offers...I was the last to present & was told before I even started that 2 agents had already been sent home because their offer price was too no pressure! ;) I wanted to check the floor to see if there was a trap door under my chair, lol...

All kidding aside, there were 2 of us parked out front when the Listing Agent came to tell us (separately) that they chose another offer...according to the Agent, the 2 of us were neck & neck on price but the 1st offer that got presented was ALL cash (as in there would be NO mortgage on the property) & for a CRAZY amount of money...and I quote "you will be blown away when you see how much" & that he, the listing agent, would never counsel a client to pay that for this house. Apparently no need to worry about the house appraising in this case...sigh :(

So it's back to the drawing board for us...knocking on doors in the neighbourhood my client wants to live in & stalking the hot sheets on the MLS® for new's a glamourous life :)

Have a fabulous day!

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