For the first time, ever, in my real estate career, I'm seeing homes not appraise for the contract price.
Now, some may think this is long overdue, and that appraisers are finally doing their job the RIGHT way. I'm of the opinion that appraisers were doing their job the right way all along - houses were worth those inflated prices because people were willing to pay those inflated prices. If houses are worth what a Buyer is willing to pay....well, I'm getting off track here.
Anyhow, the fact of the matter is that appraisers are now under direct scrutiny, and they're being a lot more stringent about how they perform their appraisals. I'm hearing (and our office reporting) of a lot more deals falling through because the home did not appraise at the contract price.
What does this mean for Buyers and Agents?
Well, it lets us off the hook just a bit, doesn't it? No longer can Sellers overprice their home against their Realtor's advice and hope that someone, somewhere will pay their inflated pricing. I mean, sure they can still do it, but that appraisal is going to kill any deal they get at their inflated pricing, unless they are willing to lower their price to the appraisal price.
For Buyers, a appraisal can be your very best friend. It can shave a few thousand dollars off your contract price. Of course, it can kill the deal, as well, but in most cases, the Seller is more than willing to compromise with you to get the deal done.
What does this mean for Sellers?
Comps, comps, and more comps! Make sure that your asking price is backed up by good, solid, CURRENT comps. You can't overprice by $5,000 and hope you can squeeze a little bit out of your home. There's no squeezing anything at this point (except your proceeds). Don't look at it as a loss - you probably wouldn't get that extra $5,000 anyway. Look at as you are priced right.
Secondly, keep an eye on your Seller's Assist numbers. Previously, no one had a second thought about jacking the contract price up to accommodate a Seller's Assist. Those days are gone. Your house needs to appraise at the contract price, not at your net price. If you're offering a Seller's Assist, figure on taking it off of your current price.
There are new procedures going into place in May that will affect how lenders order appraisals, and I expect some fall out in pricing to result. It's more important than ever that you keep appraisals in mind when pricing, or purchasing a home.