In a shifting market it’s not uncommon for real estate appraisal values to lag behind the market of the moment.  We have such a market in SW Florida.

Have you ever noticed when gas prices at the pump rise, they seem to do so quickly and when they fall it tends to be slow?  Appraisals feel kind of the same way.  In a rapidly rising market appraisers are slow to pick up on the rise, but when prices are falling, they get conservative and offer time value adjustments to the downside.  Appraisers are simply protecting themselves because they have risk.  The last thing they want is a lender accusing them of over valuing property values.

Appraisers concentrate on what happened in the past and must wait on data to reflect on what is happening on the streets today.  It’s a lot like looking in the rear-view mirror, they can tell you where the market has been but not where the market is headed.  Appraisers must prove values with data all the while mitigating risk by being caught in a rapidly changing market.

There are things agents can do to improve value with the appraiser as well as sell over appraised value.  It takes an experienced agent to deal with these issues.  Sellers mistakenly believe it does not matter who they list with in a seller’s market.  It always matters who you list with, and now is no exception!

Experienced buyer’s agents are counseling buyers on what it takes to score a property today.  We are seeing multiple offers and many times the winning buyer will pay well over asking price.  Buyers are being counseled it may or may not appraise depending on the appraiser and the buyer will have to pay the difference.  The lender will lend based upon a loan to value ratio of the appraisal.  This does not stop the buyer from purchasing, but it might raise their down payment.  Lenders are now counseling buyers too that homes are selling for more than appraised value in many cases.  Real estate appraisal values simply are not keeping up.

Sellers are not accepting as many repair items after inspection either.  They do not have to.  If the buyer backs out there may be 10-20 other buyers willing to pick up that property the day it falls out.  In fact, many buyers are scoring deals simply on the fear of greed of a previous buyer who backs out.  Sellers have the upper hand right now.  Buyers are not really in competition with the seller, they are in competition with all the other buyers that would love to have their deal.

You never want to go back to sell a property a second time, unless the first buyer is not being reasonable or if the line of backup buyers is stronger and more motivated than the first.  This is one reason we spend time on selecting the best 1^st contract.  We evaluate how likely this buyer is to complete the sale. We look at pre-approval letter, amount down, amount in escrow, and all terms.  The offer tells a story and prompts questions.  We may call the lender or ask further questions to help the seller make the best decision for them.

For buyers it helps to work with a team that represents a lot of sellers, because we know what listing agents are looking for in an offer, and we can help structure your offer to be more desirable.  Remember, your offer not only has to be acceptable to seller, it must beat out all the other offers.  Price is just one term among many the seller and listing agent looks at.

If you are looking to buy and sell, give us a call.  Brett and Sande can be reached at 239-489-4042 Ext 4.  We’ll be happy to talk about your situation and give you the advice you need to succeed. Visit www.SWFLHomevalues.com to see what your home is worth.   Good luck and Happy House Hunting!

See last week’s article “Correctly Priced Homes Selling with Multiple Offers”

SW Florida Real Estate Market Update September 2020