Uncategories The appraisal gap

The appraisal gap

12.04
LOs, what has been your experience with the appraisal gap? Have you lost deals because of it? What advice are you giving your borrowers?
The home checked off every box on Linda's list. It had a large, fenced-in yard; modern appliances in an updated kitchen; a "man cave" for her husband; beamed ceilings; a massive master suite; and was located in a good school district. The house, in the Nashville area, was listed at $405,000. Linda (who asked that her real name not be used) beat out a dozen other prospective buyers by offering $445,000 and waiving all contingencies. She also wrote a nice letter to the sellers.

 

Unfortunately, the appraisal put the house's value at just under $380,000. The seller wouldn't budge on price. Linda had a sizable downpayment but still needed to find a way to close the appraisal gap. She received help from family members and was able to take a loan out against her 401K to make up the difference. She plans to move into the new house later this spring.

 

But not everybody has the ability to tap friends and family or investments.

 

LOs, what has been your experience with the appraisal gap? Have you lost deals because of it? What advice are you giving your borrowers? 

 

Finally, are appraisers pricing homes appropriately in such a seller's market, where bidding wars break out more often than not? As always, you can reach me anonymously at jkleimann@housingwire.com 

 

James Kleimann

Managing Editor, HousingWire

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