To all the agents in the house:
Sometimes OpenHouse investigates the loftiest questions facing real estate, from the composition of the profession to the ongoing livelihood of agents. Other times, well, I need an answer to a specific question about how you do your jobs.
This one pertains to the buyer's side of a home sale. Do you explain to your client about the difference between how much they buy the house and what the house will be appraised for?
HousingWire has a slew of recent coverage on home appraisers including a two-part series investigating claims of racial discrimination within the profession. One theme is that appraisers get blamed for a lot. And this includes the gap between a home's sale price and appraised value, a gap that may be wider lately due to increased demand and low inventory.
Appraisers and appraisal management company heads I talk to say the Appraisal Foundation's professional standards give little value to current market trends. They also bite back at the first real estate professional involved in the homebuying process – the agent – for not properly explaining to buyers that the purchase price may not conform to the terms of the mortgage.
Some agents are "maniacally driven" to close a home sale within 30 days, said Joe Bryant, president of TriServ LLC, which is an appraisal management company based in suburban Atlanta. But these same agents, Bryant contended, don't explain how the mortgage lender will value their home, which can add avoidable late-inning drama to the homebuying process.
Agents, what do you see as the best practice in terms of explaining the difference between purchase price and appraised value to homebuyers? And do your clients tend to readily understand this difference, or does it come as a surprise for them?
Please email me anonymously at mblake@housingwire.com.
Sincerely,
Matthew Blake
Senior Real Estate Reporter
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