As property values and multiple offers continue to increase in Eldorado, the issue of the appraisal has become a common conversation.
It can now take up to two months to close a house purchase, and during that time, the data for the prices of sold homes in the market may not have caught up to the price that homes are currently selling for.
Some buyers, who would typically pay cash for their new homes, are getting loans due to the historically low interest rates.
As a result, in most multiple-offer situations, the majority of offers have a lender involved, with the resulting need for an appraisal.
A better plan is to require the buyer to waive the appraisal contingency at the time of contract acceptance.
This scenario is preferable, so all parties are aware of the potential issue and makes for far less drama towards the end of the transaction.
Best to nail this down up front, and then buyers are aware they may need more cash on hand than just their closing costs.
Appraisers are taking the current market into consideration and not using comparable sales that are more than three months old. They use active and pending listings as well, not just sold data.
“When we look at comparable sales, it is already historical data,” says appraiser Torsten Moest.
“When appraising property in a fast-moving appreciating market, if a pending sale went under contract shortly after the home was listed, it often indicates a contract price at or above listing price.”
Buyers who come ready to play in Eldorado – know that they will likely be paying over the asking price, will happily waive appraisal contingency and employ the many tips and tricks to secure a home in Eldorado.