Appraisals, some blame appraisers for part of the housing market crash and now they are catching heat again for blowing up sales. In order for the buyers to get their financing, the home they are buying has to appraise for the amount on the purchase agreement. Right now the housing market is starting to rebound causing multiple offer situations which drive the price of a home up. According to the National Association of Realtors, 33% of appraisals in May 2012 came in BELOW the price on the purchase agreement. Evidently, many appraisers are not correctly recognizing the increase in home prices. If the appraisal comes in too low there are basically 2 options, lower the purchase price which the buyers don’t mind but the sellers are not happy with or try to have the appraiser make an adjustment which does not happen very often. It is the duty of the appraiser to find the correct value for your home in the current market but it is also your job as buyers and sellers to make sure that the price offered is also a fair price in the current market. Moral of the story is that when the purchase agreement is signed and the inspection is finished, the sale is still not done until the appraisal comes in.
According to the National Association of Realtors, the index of sales agreements rose 2 percent last month to 97 meaning that the number of contracts to buy homes is up. This is the highest level since April of 2010 which was the last month of the federal home buyer tax credit. A reading of 100 is considered to signal a healthy market.
These numbers are for signed contracts not for closed sales, so there is about a 2 month lag time from signing to closing but more people are buying!
Sales of previously owned homes were also at their highest levels since May 2010, first time home buyers are buying more homes, mortgage rates are extremely low and the supply of homes available is at a 7 yr low. All of these point to the start of a recovery for the housing industry, but a full recovery is still years away.