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APPRAISAL WOES

Over the last 30 days, I’ve had challenges on several transactions due to appraisals coming in low. I believe I’m being objective when I say they came in “low” because they were not in contract for tremendously higher than what the recent solds were. The appraisers seemed to be making overly negative adjustments and/or were just flat-out ignoring major positive attributes to our subject property. I’ve checked with other local agents and many of them are reporting similar challenges. This is NOT on every transaction, and most appraisers do a great job, but it’s happening on enough transactions that it’s becoming a common issue.

 

It’s possible that some appraisers think our market is getting over-heated again beyond the fundamentals, and that it’s their job to slow things down by putting their “thumb on the scale” a little bit. I had a situation recently where the same home was appraised by two different appraisers less than two weeks of each other and it came in $25K higher the second time.

 

So what does this mean if you are in the real estate market right now? If you are a seller, you may look more favorably at offers where the buyer is willing to waive some or all of the appraisal contingency. Sometimes the highest offer is not the best offer. If you are the buyer, don’t be surprised if the seller asks you to waive some or all of the appraisal contingency. If you are willing to do that, it helps if you can provide proof of liquid funds with your offer to show that you can pay the difference if needed. In the SF/Silicon Valley, it’s almost expected that the buyer waive the appraisal contingency. We aren’t there yet out here, but it may be moving in that direction.

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