“The Difference between Try and Triumph is just a Little Umph”!!!       Marvin Phillips……


Banks have become very conservative when lending mortgage money today.  With the current foreclosure challenges in the country, we can’t really blame them. 

The requirements now necessary to qualify for mortgages have gotten much more stringent and it seems will get even more stringent as we move forward.  The banks want to make sure the buyer has the ability to pay back the loan.  But that isn’t all that is involved.

The second way a bank can protect their investment in the mortgage is to make sure that the collateral backing that mortgage is secure.  This is where the “Appraisal” comes into play.  The banks want to make sure that, should the buyer not be able to make their payments, the house they will be forced to take back will sell for an amount at least equal to the balance left on the mortgage.  For that reason, the banks seem to be getting more conservative with appraisals.

The National Association of Realtors (NAR) released their Exiting Homes Sales Report it said: “11% of Realtors report a contract was cancelled in April from an appraisal coming in below the price negotiated between a buyer and seller, 10% had a contract delayed, and 14% said a contract was renegotiated to a lower sales price as a result of a low appraisal.”

One out of four real estate transactions was either cancelled (11%) or renegotiated to a lower sales price (14%) because of a low appraisal!!

The last few listing appointments I have been on the seller wanted to know what is the most challenging part of the “selling of their home”.  And I have to tell them the appraisal.  Other agents go in and let the seller think they can get a much higher price because that’s what seller’s want to hear and the agents want the listing.  But in reality the home must appraise.  And if your comps for that home do not match what the sellers thinks or wants for his home there will be a problem.

You can no longer over price a home, or I should say you can but it will not appraise.  And if it does not appraise then the buyer can not get the loan.  Yes we do have a lot of cash buyers out there and if you are lucky to get one who wants to buy your home that’s great.  But that buyer is not going to pay more than the home is worth, but you don’t have to worry that the home will not appraise because there is no appraisal.

It is still a Great Time to sell and to buy.  But the process has become much more difficult.  Work with a Real Estate professional and the process will be much easier.

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