What To Expect as Appraisal Gaps Grow

Dated: June 29 2021

Views: 6

What To Expect as Appraisal Gaps Grow

What To Expect as Appraisal Gaps Grow | MyKCM

In today’s real estate market, low inventory and high demand are driving up home prices. As many as 54% of homes are getting offers over the listing price, based on the latest Realtors Confidence Index from the National Association of Realtors (NAR). Shawn Telford, Chief Appraiser at CoreLogicelaborates:

“The frequency of buyers being willing to pay more than the market data supports is increasing.”

While this is great news for today’s sellers, it can be tricky to navigate if the price of your contract doesn’t match up with the appraisal for the house. It’s called an appraisal gap, and it’s happening more in today’s market than the norm.

According to recent data from CoreLogic19% of homes had their appraised value come in below the contract price in April of this year. That’s more than double the percentage in each of the two previous Aprils.

The chart below uses the latest insights from NAR’s Realtors Confidence Index to showcase how often an issue with an appraisal slowed or stalled the momentum of a house sale in May of this year compared to May of last year.What To Expect as Appraisal Gaps Grow | MyKCMIf an appraisal comes in below the contract price, the buyer’s lender won’t loan them more than the house’s appraised value. That means there’s going to be a gap between the amount of loan the buyer can secure and the contract price on the house.

In this situation, both the buyer and seller have a vested interest in making sure the sale moves forward with little to no delay. The seller will want to make sure the deal closes, and the buyer won’t want to risk losing the home. That’s why it’s common for sellers to ask the buyer to make up the difference themselves in today’s competitive market.

Bottom Line

Whether you’re buying or selling, let’s connect so you have an ally throughout the process to help you navigate the unexpected, including appraisal gaps.

Blog author image

Jason Spicer

There’s no place else quite like West Virginia, and owning property here is one of the great privileges of life. I love this area and once I show you around, I’m convinced you will love it too an....

Latest Blog Posts

If You’re a Buyer, Is Offering Asking Price Enough?

If You’re a Buyer, Is Offering Asking Price Enough?In today’s real estate market, buyers shouldn’t shop for a home with the expectation they’ll be able to negotiate a lower

Read More

Is It Time To Move on to a New Home?

Is It Time To Move on to a New Home?If you’ve been in your home for longer than five years, you’re not alone. According to recent data from First American, homeowners are staying

Read More

Home Price Appreciation Is Skyrocketing in 2021. What About 2022?

Home Price Appreciation Is Skyrocketing in 2021. What About 2022?One of the major story lines over the last year is how well the residential real estate market performed. One key metric in the

Read More

What Do Experts Say About Today’s Mortgage Rates?

What Do Experts Say About Today’s Mortgage Rates?Mortgage rates are hovering near record lows, and that’s good news for today’s homebuyers. The graph below shows mortgage

Read More