Appraisals across the board are coming in "lower" . We've had to adjust our loans recently to this trend. And for me personally, I've placed an offer on house this week for $50K less than list. There are no comps to support the sale price. My Offer was declined and not even countered. But the seller may now have a realization that their house is not worth the list. I encourage buyers to start making lower and better offers to get sellers at the correct price point if the property is overpriced priced.
I recently made an offer $50K below the asking price as well. Buyers need to stop meeting or exceeding the sellers asking prices. So many of these listings are extremely over valued. Buyers have a share of the responsibility for why house prices are so high.
I had an agent that was stuck on Covid market and wouldn’t want to submit offers under asking price and kept telling me that this is a hot market still and offers won’t be accepted. I kept seeing home drop price from $10-40k after 15 days on market I showed her that and said you need to get up to date. Long story short I dropped her and found an awesome agent saw 25 homes in three days back to back she was not afraid to offer less than asking and she even asked for appliances and some furniture pieces we casually mentioned we liked. After negotiating we just got our offer accepted $10k under asking price and they paid the solar off and no HOA and home was built 10/15/23 they paid more than what we are paying for it new. California.
During the pandemic when houses were on 🔥 I made an offer higher than what seller wanted. The appraisal came back lower than asking price and I almost lost my Earnest money had I removed appraisal contingency. It all worked out at end as the seller ultimately accepted 30K lower than my original bid. Now I’m sitting on 80K in equity from original price.
Appraisers should NOT be able to see the selling price, the contract or any purchase history for the home they are appraising. The fact that they can see all that makes the appraisal very much influenced by outside factors lol
Although I fully agree with you it would be REALLY hard for an appraiser to not see the "selling" price as that is public info as well as purchase history.... now the contract is a different story. I.e the seller price is 320k but the contract is 340k. That can be sealed as the appraiser does not need to know what you are currently trying to buy the house for. so if it comes in at 320k then that's what it is. if it comes in lower even better. if it comes in higher then that isn't affected by your "contracted" price. Also this is why its Law that banks cannot "pick" their appraisers and is put into a randomizer the reduce the likelihood of someone having a bias towards the sale although not perfect as even in today's society we still have racial and or implicit bias which is harder to control.
Completely disagree. If you are going to lend hundreds of thousands you would want to know the list price, the price history, the contract, etc. If you don't like it, pay in cash.
This is an amazingly timely video for us. We were under contract, hit some snags but worked through them. This deal has been dragged out for a couple months through no fault of ours. We knew when we didn’t hear anything for a week that something was wrong with the appraisal. The appraisal came back $40k under contract price. Home has been on the market for almost a year with no offers. Seller won’t come down to appraisal price so we’re walking. Just letting that final contingency that had extended time to close until tomorrow run out. THANK YOU for explaining this process. Anything can happen during a real estate deal, and it’s not a done deal until you’ve signed the paperwork, exchanged the money and have the keys in your hand.
You thank you thank you ! I am not a first time home buyer but learn so much from watching your Channel that I did not even know before even though we've been in our home for 9 years. You giving I'm biased opinions and are very informative and thorough. I appreciate your make it plain approach to laying out the information. I just shared your video with my church community. I hope it helps them as well. You should add a give button to your Channel I would love to sow into this great info I received
A lot of houses in my area (northern nj) go under contract and then wind up right back on the market. I figured it was due to appraisals coming in very low compared to the inflated price....?
Can you explain the difference between appraised values and assessed values? Can we use the assessed values to help us determine what a fair value is for the house when making an offer? A video might be helpful on this.
Back when I bought my house in 2015 the appraisal came back 5k under the selling price and while the agent was like "Hey you're getting the home for cheaper!" I was irritated with the new price because now the seller did not want to cover the closing costs which was just a few hundred under 5k so savings was basically nill.
Well i hear ya and that sucks that you had to pay that upfront but look at it this way... you saved yourself more than a few hundred over the life of the loan due to lower loan costs... so in actuality you saving more with you paying closing costs rather than rolled into loan.
I lucked up. I had offered $10K more than the seller's price and the house appraised for $20K below my offer and $10K below the seller's price. However, the seller had listed the house two months prior at what my house appraised for, but he took it off the market because his family member wanted to buy it. Their financing fell through, so he relisted it and increased the sales price by $10K. When the appraisal came back after I made my offer, the appraiser made a note saying something about the house had been appraised recently for the price it was being appraised for. I told my realtor that I wasn't paying a higher price than what the house appraised for. My seller accepted the appraised amount.
@user-oh6ox9hz9c No, I bought in 2021 when houses were way overpriced and people were offering way over asking price just to buy a house. I offered the $10K over asking price because l wanted to. Not because of anything my realtor did/didn't do. That was my choice. The appraisal just came in $20K below my offer because the seller listed it 2 months earlier at that price. My appraiser put that in my appraisal document. And also said that houses in my area typically sell at 6.3% less than the sales price.
Banks need to approve loans based on long term averages. Not short term. It should automatically be denied. This will keep housing priced at normal long terms averages and healthy gains where they can remain sustainable.
I tried this four times and every seller walked away and went to the next bidder. Ended up finally waving appraisal gap. I wouldn't have gotten into my current place without doing this, and have gained a ton of equity in a hot market area since 2021.
what i cant stand is that, if the house is under appraised and you bid higher than that the buyer owes the difference. i know that's just how the world works and addendums can be made but it is still dumb as a bag of hammers - that someone else affects just how much one should pay - when it goes in that direction. Obviously, the other way around, it's at the owners loss.
I am from Illinois. I asked my buyer agent to make an offer for a house with the appraisal contingency. But he said we can't do that because all agents use the "Illinois Multi-Board Residential Real Estate Contract 7.0" template and he can not change any word on it. Now, I am confused about what we can do in case of low appraisal if we can not have appraisal contingency?
Sounds like you need a new Realtor. While there is no place in the Illinois Promulgated Contract, there is a one-page Contingent Form that he can have you sign, in order to protect yourself from a low Appraisal, so that you can back-out of the Contract and get your Earnest Money back. He/She must be brand-new.
Thats embarrassing. If the bank (who will lend to anyone with a heartbeat to make money) thinks you are about to overpay for a house and thinks its too risky, then that tells you that you did a terrible job negotiating or you arent smart enough to realize you cant afford that price.
Funny that ANY lending institution will approve ANY amount over MSRP’s for cars accepting that risks with the guise of higher interest rates.🤦🏻♂️ So lending institutions won’t do it for mortgages which that commodity increases in value and cars rapidly depreciation in value they would. WHAT?!🤷🏻♂️
What shall I do if I found many issues during inspection, like one side of the house Crack from outside, bedroom surface up/down, pest eating wood in the patio and roof 10 years old already?
Appraisals across the board are coming in "lower" . We've had to adjust our loans recently to this trend. And for me personally, I've placed an offer on house this week for $50K less than list. There are no comps to support the sale price. My Offer was declined and not even countered. But the seller may now have a realization that their house is not worth the list. I encourage buyers to start making lower and better offers to get sellers at the correct price point if the property is overpriced priced.
I recently made an offer $50K below the asking price as well. Buyers need to stop meeting or exceeding the sellers asking prices. So many of these listings are extremely over valued. Buyers have a share of the responsibility for why house prices are so high.
I had an agent that was stuck on Covid market and wouldn’t want to submit offers under asking price and kept telling me that this is a hot market still and offers won’t be accepted. I kept seeing home drop price from $10-40k after 15 days on market I showed her that and said you need to get up to date. Long story short I dropped her and found an awesome agent saw 25 homes in three days back to back she was not afraid to offer less than asking and she even asked for appliances and some furniture pieces we casually mentioned we liked. After negotiating we just got our offer accepted $10k under asking price and they paid the solar off and no HOA and home was built 10/15/23 they paid more than what we are paying for it new. California.
Let me guess most clowns here are in city/towns that have inflated prices.
The background music was hitting and then I realized its a different tune of the Pokemon center music?
Yup
😝
During the pandemic when houses were on 🔥 I made an offer higher than what seller wanted. The appraisal came back lower than asking price and I almost lost my Earnest money had I removed appraisal contingency. It all worked out at end as the seller ultimately accepted 30K lower than my original bid. Now I’m sitting on 80K in equity from original price.
Appraisers should NOT be able to see the selling price, the contract or any purchase history for the home they are appraising.
The fact that they can see all that makes the appraisal very much influenced by outside factors lol
Agree
True statement! Agents are also in "cahoots" with appraisers to make the deal close, further perpetuating inflation of home values.
Although I fully agree with you it would be REALLY hard for an appraiser to not see the "selling" price as that is public info as well as purchase history.... now the contract is a different story. I.e the seller price is 320k but the contract is 340k. That can be sealed as the appraiser does not need to know what you are currently trying to buy the house for. so if it comes in at 320k then that's what it is. if it comes in lower even better. if it comes in higher then that isn't affected by your "contracted" price. Also this is why its Law that banks cannot "pick" their appraisers and is put into a randomizer the reduce the likelihood of someone having a bias towards the sale although not perfect as even in today's society we still have racial and or implicit bias which is harder to control.
The price history is relevant data.
Completely disagree. If you are going to lend hundreds of thousands you would want to know the list price, the price history, the contract, etc. If you don't like it, pay in cash.
A video spelling out what you should look for in a real estate agent would be super helpful
This is an amazingly timely video for us.
We were under contract, hit some snags but worked through them. This deal has been dragged out for a couple months through no fault of ours. We knew when we didn’t hear anything for a week that something was wrong with the appraisal.
The appraisal came back $40k under contract price. Home has been on the market for almost a year with no offers. Seller won’t come down to appraisal price so we’re walking. Just letting that final contingency that had extended time to close until tomorrow run out.
THANK YOU for explaining this process. Anything can happen during a real estate deal, and it’s not a done deal until you’ve signed the paperwork, exchanged the money and have the keys in your hand.
The pokemon music is sending me back for real
Back to a better time…
Thank you for this episode! Priceless advice!
You thank you thank you ! I am not a first time home buyer but learn so much from watching your Channel that I did not even know before even though we've been in our home for 9 years. You giving I'm biased opinions and are very informative and thorough. I appreciate your make it plain approach to laying out the information. I just shared your video with my church community. I hope it helps them as well. You should add a give button to your Channel I would love to sow into this great info I received
Good video! This will become way more common [especially in AZ) as home prices continue to slip...
Really enjoyed the leverage discussion and chart. Thank you for making this video!
A lot of houses in my area (northern nj) go under contract and then wind up right back on the market. I figured it was due to appraisals coming in very low compared to the inflated price....?
Or the owners can’t afford it due to fluctuating interest rates.
Probably do the house inspection and they find Red flags, then back out
This video probably won't get as many views as your other ones, but it's S Tier commentary!
Thank you good sir
Looks like the market is starting to self correct. Appraisals are coming in low. Housing prices aren't going up anymore.
Can you explain the difference between appraised values and assessed values? Can we use the assessed values to help us determine what a fair value is for the house when making an offer? A video might be helpful on this.
Back when I bought my house in 2015 the appraisal came back 5k under the selling price and while the agent was like "Hey you're getting the home for cheaper!" I was irritated with the new price because now the seller did not want to cover the closing costs which was just a few hundred under 5k so savings was basically nill.
Well i hear ya and that sucks that you had to pay that upfront but look at it this way... you saved yourself more than a few hundred over the life of the loan due to lower loan costs... so in actuality you saving more with you paying closing costs rather than rolled into loan.
Sounds like you ended up a few hundred ahead in this scenario?
good stuff Javi! congrats on your growing familia!
I lucked up. I had offered $10K more than the seller's price and the house appraised for $20K below my offer and $10K below the seller's price. However, the seller had listed the house two months prior at what my house appraised for, but he took it off the market because his family member wanted to buy it. Their financing fell through, so he relisted it and increased the sales price by $10K. When the appraisal came back after I made my offer, the appraiser made a note saying something about the house had been appraised recently for the price it was being appraised for. I told my realtor that I wasn't paying a higher price than what the house appraised for. My seller accepted the appraised amount.
@user-oh6ox9hz9c No, I bought in 2021 when houses were way overpriced and people were offering way over asking price just to buy a house. I offered the $10K over asking price because l wanted to. Not because of anything my realtor did/didn't do. That was my choice. The appraisal just came in $20K below my offer because the seller listed it 2 months earlier at that price. My appraiser put that in my appraisal document. And also said that houses in my area typically sell at 6.3% less than the sales price.
What about those cash buyers that pay 1.4 like with nothing w/o contingency other than inspections.
What about city/county appraisal value?
Come for the info. Stay for the gaming background music
Banks need to approve loans based on long term averages. Not short term. It should automatically be denied. This will keep housing priced at normal long terms averages and healthy gains where they can remain sustainable.
They did this pre 2008. Didn't turn out well.
I’m a veteran, and if it came below mine, I would not continue with the buy. That was apart of my contract contingency.
I tried this four times and every seller walked away and went to the next bidder. Ended up finally waving appraisal gap. I wouldn't have gotten into my current place without doing this, and have gained a ton of equity in a hot market area since 2021.
2021 was a different time! It was the opposite, almost no one didn’t waive their appraisal, it’s flipped now
The banks know what's coming they'd prefer not to be the bag holders and they need to sell these as MBS's to investors for a real return now.
Love the retro games in the background...man feels strange calling the N64 "retro"....I'm old =(
Tell me about it.
Game Theory at play very nice 👍
what i cant stand is that, if the house is under appraised and you bid higher than that the buyer owes the difference. i know that's just how the world works and addendums can be made but it is still dumb as a bag of hammers - that someone else affects just how much one should pay - when it goes in that direction. Obviously, the other way around, it's at the owners loss.
I am from Illinois. I asked my buyer agent to make an offer for a house with the appraisal contingency. But he said we can't do that because all agents use the "Illinois Multi-Board Residential Real Estate Contract 7.0" template and he can not change any word on it. Now, I am confused about what we can do in case of low appraisal if we can not have appraisal contingency?
Sounds like you need a new Realtor. While there is no place in the Illinois Promulgated Contract, there is a one-page Contingent Form that he can have you sign, in order to protect yourself from a low Appraisal, so that you can back-out of the Contract and get your Earnest Money back. He/She must be brand-new.
@@gvnumber3200 Thank you for letting me know this. could you please tell me where can I find the sample of this one-page contingent form?
That sounds shady as hell and a tactic that a tiktok used home salesman would pull trying to get as high as a commission as possible.
Thats embarrassing. If the bank (who will lend to anyone with a heartbeat to make money) thinks you are about to overpay for a house and thinks its too risky, then that tells you that you did a terrible job negotiating or you arent smart enough to realize you cant afford that price.
Funny that ANY lending institution will approve ANY amount over MSRP’s for cars accepting that risks with the guise of higher interest rates.🤦🏻♂️
So lending institutions won’t do it for mortgages which that commodity increases in value and cars rapidly depreciation in value they would. WHAT?!🤷🏻♂️
What shall I do if I found many issues during inspection, like one side of the house Crack from outside, bedroom surface up/down, pest eating wood in the patio and roof 10 years old already?
What if the appraisal came in 80k over? I'm in Texas
They builder would not be entitled to more
Is this an issue that can appear with new homes by big home builders?
And still over priced,,, this is a game builders and realtors are playing……….
correct..
What happens to the earnest money if seller doesn’t want to lower the price after the appraisal was lower?
Yes, that is where I am currently at.😬
Appraisers should be on the buyers side since it's a sellers market. There we go 😂
Can you explain the National Association of Realtors 418 million settlement
Yes! I made it a few videos ago.
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First 🥇
Damn I'm really early