If you read my last post; you are seeing a trend. Well it is not just a trend in what is on my mind this week, but a trend on what is happening in the Real Estate market in general.
Appraisers determine how much the home is worth and how much of a loan the bank will give. Well in much of the DC Metro area; we are moving away from the crazy buyers market and homes are in fact selling. Well; they are going under contract. The "selling" part is what is the problem.
Low Appraisals are killing deals all over the place. Buyers can't get financing, sellers can't drop the price to the low appraised value because of little equity - deals are falling apart.
Appraisers use comparable sales. I get that. But let's look at this senerio: House for sale... in the 1st week they get 2 offers at (or damn close to) full
price. The seller selects an offer and the Appraiser swoops in. He sees 3 homes in this neighborhood that sold for 20k less than this sales price and says "Poof" your home is worth 20k less. Not what these 2 buyers were willing to pay (fair market value); but what the last homes sold for. The seller lowers the price and this home sells for the lower price.
The house next door goes on the market. Gets 2 offers; appraiser says "Nope" - it's only worth what your neighbor got.
and so on and so on ...
How do the prices ever change then ???
When the Appraiser can appreciate the fact that a home is getting multiple offers while new to the market. Maybe - JUST maybe - he can consider "Fair Market Value".
Just my 2 cents.....
Contact James Downing of the Downing Real Estate Group, if you are selling, buying or have questions! Office: 202-362-5800 Cell: 703.244.3971 Licensed in Washington DC, Virginia & Maryland. Coldwell Banker Residential Brokerage - Chevy Chase
5028 Wisconsin Ave NW Suite 100 * Washington DC 20016
