Having an appraisal come in lower than expected can be stressful, but it’s not the end of the world! Overpricing occurs in every market condition for many reasons. An abundance of foreclosures in the neighborhood, an over-inflated asking price, and incorrect pricing by the underwriter can all contribute to this awkward situation. But what should you do when the price comes back below expectations?
You may request a value appeal to have the appraiser review their reasoning for not using the similar sales sent by the lender. There may have been an oversight by the appraiser, especially during the busiest seasons.
You can also coordinate with your lender to arrange a second appraisal. Hopefully, you can receive a higher valuation.
If the home’s price was too high to begin with, it’s usually easiest for all parties involved to simply lower the asking price to reflect the low appraisal.
If the appraisal is lower than expected, the buyer may not qualify for the terms in the loan contingency, making them ineligible for the purchase. As long as the purchase contract has been written carefully by a professional, this will require the seller to return the buyer’s deposit upon cancellation.
Of course, each situation is unique and is best navigated with the help of an experienced lender and realtor. Contact me if you have questions!
This article originally appeared here on the Star Tribune website.
Are you living in a hot housing market?
To find out, the Star Tribune’s housing market index combines four key housing metrics for cities with more than 100 sales last year: Change in the average price per square foot; average days on market; percent of list price received by sellers and share of all sales that were foreclosures and short sales.
The Star Tribune ranked each community on the four metrics, then added the rankings together to get an index score. (More details are at the bottom of the page.)
The higher the index score, the more likely houses in those areas were likely to sell quickly and for nearly the full asking price. And because of big price gains, these were also communities that had few distressed sales.
Minneapolis and St. Paul neighborhoods, which had far fewer sales than their suburban counterparts, were compared with one another separately.
Use the map and list below to find your community and see deeper details about how it scored on the index and some key demographics. (Note it only includes communities with 100 or more sales in 2016.) Use the toggle button below the map to see index results for Minneapolis and St. Paul neighborhoods instead.
All data come from MAAR and RMLS of MN, Inc. Data deemed reliable but not guaranteed. Not to be reproduced without MAAR’s consent. Minneapolis Area Association of Realtors
About the index:
Numerical rankings were assigned to each community on four metrics, then those rankings were added together to create the final index score. We compared 103 cities against each other, and separately compared the 100 Minneapolis and St. Paul neighborhoods against each other. Here’s how the rankings worked for the four metrics:
1) We calculated the percentage change between the average price per square foot in 2016 and the average across the previous four years. The change between those two numbers was then ranked. A ranking of 1 represented the lowest change, while the highest score was 103 for the city analysis and 100 for the neighborhood analysis.
2) For 2016 average days on market, a score of 1 represented the longest days on market, while the city with the shortest days on market got the highest score (either 103 for cities or 100 for neighborhoods).
3) For the 2016 percent of original list price received, the community with the lowest percentage received a score of 1. The highest-scoring communities tended to have average percentage of list price received at or above 99 percent.
4) The index also factored in the percentage of distressed sales in 2016 (foreclosures and short sales). In this case, the community received a ranking of 1 if it had the highest percentage of distressed sales. Communities with low percentages of distressed sales got the highest rankings.
This story origianally appeared here on Kare 11.
Buying a house can be stressful, but thanks to hackers the stress level for some is on a whole new level.
“We’ve seen a significant increase, especially in the last few months, of cyber security fraud,” said Edina Realty CEO Greg Mason.
Mason is warning people about a relatively new scam that is costing home buyers thousands.
“It’s become a greater target,” he said of real estate transactions.
Here’s how it works. A scammer sends an email to a consumer or a realtor with a fraudulent link attached to it. Once they click on the link, the crook has access to personal information. With that info they send a real-looking email to the buyer asking them to wire their down payment. Often the email comes days before the closing of the sale, real estate officials say.
“We’ve had two situations recently and we’ve had small loses that we’ve taken care of and covered for our consumers,” he said.
This isn’t just a local issue, said Chris Galler, the CEO for Minnesota Realtor’s Association.
“The east and west coasts get the worst of it for some reason,” he said.
His organization issued warnings to his members here in Minnesota about the scam and have been tracking it for about a year.
He also reminds people to never wire money without independently verifying it no matter how legitimate the email looks.
“The key is to deal with people you’re familiar with so that you know what you’re doing with your money,” he said.
Edina Realty also says it will only request a cashier’s check from its clients and will never ask them to wire money.
“Everyone is making sure that they’re aware and have protections in place for the consumer,” said Mason.
Edina Realty also added a disclosure form its clients read and sign warning them about this problem. Mason says realtors have also increased training and the company has improved its cyber security.
“It’s our number-one priority right now and focus for our company,” he said.
The Minnesota Association of Realtors also advises people to never trust wiring instructions sent via email. It also recommends when verifying an email, call the closing company who allegedly sent it, but use a number from the company’s website when calling them, not the number listed in the email.
The organization also advises if a buyer is giving financial information on the web, look at the URL and make sure it reads https (the “s” stands for secure). Instead of clicking on the link via an email look up the URL and type in the web address yourself, the association also recommends.
Thinking of building a new home?
Let me be your guide during the Parade of Homes Spring Showcase!
Remember, the agent sitting in the model represents the builder, not you. My commission is paid for by the builder, so you get to be represented and don’t pay for it.
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Building a home is one of the biggest investments you will ever make in life.
Don’t do it alone.
The Spring Showcase Parade of Homes runs March 4 – April 2 (noon to 6pm) for new homes, and will also feature 64 remodeled homes between March 31 – April 2 (noon to 6pm).