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.
Well, we are still very much in a SELLER’S MARKET in Eldorado. At press time, there are only nine properties on the market out of the 2,700-plus homes here. There are 29 under contract. Inventory continues to be very low and properties prepared for sale are selling quickly, most experiencing multiple offers and selling for over the asking price.
One of the most compelling things to come out of this time is the number of buyers looking for property in Santa Fe and Eldorado. There are not enough available homes to satisfy the demand, which has resulted in record-breaking listing and sales prices. Buyers are having to compete and some are writing four and five offers on different Eldorado homes, and still do not have a property.
In a few instances, buyers are waiving the appraisal contingency – if they are getting a loan – and making up any difference in cash, which is agreed upon at the time of contract acceptance.
$540,000 average listing price – THE HIGHEST AVERAGE LISTING PRICE IN ELDORADO HISTORY!
$477,000 average sales price – THE HIGHEST AVERAGE SALES PRICE IN ELDORADO HISTORY!
That strategy helps them compete with cash buyers. It will take a few months for the data on recent sales to be reflected in the appraisal process.
Many buyers are buying sight-unseen with the help of the 3D videos and Facetime. For my own Eldorado listings, I have had multiple buyers not step into their new houses until well after closing.
If you are thinking of selling, it might be a good strategy to list now rather than later in order to leverage the current environment. One never knows when this bubble will burst.