Value vs. Contract Price

Reading the Florida Realtor magazine there was an interesting article that was following up the August 2013 article "The Value of a Good Appraisal: Priceless!".  A big challenge currently in the Southeast Florida Real Estate Market is the contract price being for example $250,000 and if the home purchase is financed the appraisal being $235,000.  People start to worry the house isn't worth the asking price and in this situation:

• The Seller Comes down in price to $235,000
• The Buyer brings $15,000 to the table to make the deal go through
• The buyer and seller split the $15,000 and seller lowers the price to $242,5000 and the Buyer brings $7,500 to the closing table
• The final and sometimes painful option is the deal gets cancelled.

The article goes on to point out that back in the 1980s federal regulators wanted to look for "the most probably price" of a property not "the highest price"

"An appraisal below a contract price does not mean the home isn't worth the appraised value.  It means it's not worth it to a lender in the context of market value stipulated."

So while a home may be worth $250,000 to you and what is out there an appraiser, per the bank, may view it as a little less to make the bank comfortable with the financing.

The J Team works above and beyond to help the appraisal go higher by doing research and working on providing the appraiser with all the information they need to help the bank see the contract price as the real value.

We recently had a deal where the appraiser told us that the home was not worth the contract price based on the sales in the previous view months, but the inventory they were comparing too were not even in the same ball park as this home.  We provided some comparable homes that sold from the end of last year and they were updated and comparable and the bank actually came back and approved the appraisal at Contract price.

The best thing a Realtor® can do for you is to put your needs first, to work on helping everything go through and when necessary fight to help make your sale get to the closing table.  We are a Team dedicated to that.

Visit www.JayCermak.us today or call us at 954-235-3589 today!