What is an "appraisal gap"?

 

 With the demand for listings much stronger than the supply in the Denver metro area, we are seeing an abundance of showings on most listings, and multiple offers.

When you work for the buyer, you HAVE to do comparables to see if the list price is "fair market value", which is what an appraisal would come in at.    

Right now, we are seeing offers coming in THOUSANDS more than list price, and buyers should address whether they are able to make up the difference between the appraised value and their contract price.   The lender will only lend the appraised value, so if a buyer offers $50k more than list price, the difference needs to be addressed.    IF the buyer is willing to make up this difference, this amount will be needed at closing, ALONG WITH their down payment and closing costs.

It is IMPERATIVE for buyers to review their financial situation to know what they are offering and what will be expected.    Will they be upside down financially when they move in.   Yes they will.   BUT, right now homes are appreciating quickly (in March the metro area averaged 15% increase).   If a buyer is planning on remaining in a property over one year, they should make up this amount.    BUT, if a buyer losing their job or something happens and they HAVE to sell, they most likely will be upside down, and need to bring money to closing.

 

I was hoping we would see more listings this time of year, which is normal (seasonal), and it has increased.   (thru March we were seeing 500 new listings come on each week, but 1500 going pending)   Finally first of April we saw the new listings and pendings being about the same number, but we still need listings, badly!

Need more information - call me.   720-231-6373

 

 

When the Seller says no to Repairs....

Denver’s real estate market is still on FIRE, and many sellers are sitting high on their horse feeling like King of the Mountain. It is a fact, if a buyer walks, there will be another..... but.... you have to disclose those inspection issues identified!

Working with buyers in this market is challenging when you are competing, and buyers are assuming they need to accept a property AS IS. Not all sellers are this greedy, hopefully with a good offer, they will work with the buyers on any serious inspection issues.


I remember a fix n flip last year that was exceptional (on the surface) and the buyers absolutely knew this was the one ... until the inspection. Serious items were found, plugged drains in most of the sinks, dishwasher flooded the kitchen, no venting in the laundry, piping stopped in attic when it should go through the roof, decking was "squishy" and the list went on and on. The red flag was when the agent never changed status in MLS. I hope the new buyers knew all we knew....



Blue Ribbon home warranty

A couple of great tools to use when you have a stubborn seller, Lowe’s has given us REALTORS® a benefit of offering buyers and sellers a one-time 10% off coupon. Another tool I use when inspection issues are not corrected, is purchase a home warranty. This gives a buyer a year (or 14 month with Blue Ribbon) a sense of calm knowing if the water heater goes out, the expense is only $50 for the service call.



Lowe's Realtor Benefits

A Balanced Market is best for both buyers and sellers, but nice to come up with Plan B during a market that swings towards the buyer or the seller! As a Denver Realtor, I have assisted many buyers through this process.