Multiple Offers and Appraisals. Learning to Co-Exist Successfully We are presently in the time of year when Appraisers, Realtors, and Mortgage Originators ... as well as Home Buyers and Sellers are often "anxious". Both good anxious and bad anxious. This Spring, many of us find ourselves anxious, but hopeful, that our housing market is reviving itself after a long winter. This is especially true in the Midwest region where I live. Weather makes home sales somewhat more seasonal here. This year's anxieties are accompanied by the good-to-have-problem of rising house prices. In many areas, we are presently seeing multiple offers placed on strategically-priced properties. RISING home prices shouldn't be a problem, right??? Welllllll ... they can be ...  As an example, let's consider what the prior 6 months of property sales were in the Chicagoland region. Again, those months are typically the slower sales season in this region, but most certainly they have been even slower because of the health of the housing market this last year. This particular 6-month period showcased a housing market trying desperately to gain traction and stability. Now as someone that's a former Appraiser, it's my opinion that there are going to be some real challenges ahead for current-market Appraisers ... and those challenges will trickle-down to Agents, Brokers, and Mortgage Originators. And I most likely need to include Mortgage Underwriters in this mix too. Where are these challenges coming from? Many potential Home Buyers are now having to actually compete for homes in this spring's market. They've been caught a little off-guard at the return of a bewildering phenomenon ... multiple-offer bidding wars. If they are a Home Buyer that has been disappointed one or more times because of bidding wars, what happens the next time they begin a new home search? My local referral partners are telling me that the fear of getting outbid again is motivating these potential Home Buyers to aggressively pursue and price their next offer to purchase. Contracts are being signed AT or ABOVE the asking price of a home. Let's see ... new Home Buyers are securing a historically low interest rate. The Sellers have sold their home (more quickly and for perhaps higher than they had envisioned). Agents have helped facilitate and secure a successful contract. Mortgage Lenders have been called into action. The wheels are turning ... all cause for celebration. Right? Again, yes and no. Things couldn't be that simple!! What's the issue?? Remember I mentioned the previous 6 month time-frame above? Well, during that period, sales were slower or stagnant. Most times, housing prices were lower. And now?? A home has been sold. And an appraisal must be ordered and completed to facilitate the mortgage financing. But finding Comparables to support the sales price of the home might prove tricky. The question becomes ...  At what point do Appraisers recognize market changes that seem to be taking place in many housing markets? When do they choose to support and make adjustments reflecting these new trends for home sales prices? JMO, but not only do Appraisers need to recognize this trend, but so do Underwriters who eventually REVIEW, approve the Appraiser's work, and ultimately "bless" the final Opinion of Value. But therein lies the possible problem ... Consider this current scenario: As an Agent, you've priced a new listing via your MLS, supported data, and info. You've worked hard. Potential Home Buyers are now actively pursuing your listing. You've generated offers. One Buyer, a veteran of bidding wars, has made a solid, aggressive offer. They want this home! But the Sales Price on the home is at the high end of the previous 6-months' supported data, or higher. Question ... Are the Closed sales from that previous 6-month sales period, (November, December, January, February, etc.), going to support that newly-arrived-at-much-anticipated Sales Price you just received? How are Appraisers going to approach it? If not, what can be done to facilitate and safe-guard the sale? First ... let me qualify what I think is an important bit of information. EVERY HOUSING MARKET IS DIFFERENT. Those differences must be taken into consideration. That said, Listing Agents experiencing a healing, "correcting" housing market must be well-prepared to go to battle. They must be willing and capable to provide Appraisers current listings, pending sales, and March-April-May Closed Sales information that is relevant and comparable to their Subject Property. And very importantly ... Appraisers must be willing to accept and utilize valid, "fresh" sales and info from that period, as well. Add mortgage lending Underwriters into that mix. Securing successfully closed transactions for our clients must be ALL of our goals. If we don't get on the same page during this transitional period, if we don't work hand-in-hand, we will disappoint often. An unwillingness to broaden the scope of properties considered via Appraising and Underwriting ... and the data accepted and utilized within transactions ... will sink transactions completely. That will hurt our clients and further delay the healing of our housing market and real estate industry. This is going to call for a bit-of-a-shift in mentality. My guess, but there is probably going to be a bumpy adjustment period ahead regarding appraisals. Challenges to be sure. This particular situation once again provides strong proof that ... the choice of real estate and mortgage professionals working on any transaction is vitally important. Experience, knowledge, and past successes should and must count greatly for clients when making those choices. Being anxious to buy. Being anxious to sell. Being anxious to celebrate ... to move ... to decorate ... to landscape. Those are all positive. But being anxious over whether you can seal a deal with a property appraisal certainly isn't ... * Contact me today to work with a mortgage lender that has 35+ years of education and experience to assist you throughout your entire home buying and mortgage financing transaction. I can be found at any of the following: Direct: 815.277.4036 Cell/Text: 708.921.6331 Website: http://www.genemundt.com Convenience @ Skype: 630.219.1316 Via Mobile: m.genemundt.com |
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