Tuesday, June 4, 2013

Home Prices Rising....Down Payments Shrinking

The housing recovery is supposedly loosening the strings on loan origination's. Lenders are allowing buyers to put less money down.

Are they really allowing them....or is it because buyers are paying over appraised value and due to the amount of funds they have available, they are putting less down?

Case in point:

Buyer writes an offer on one of my listings. Writes it for 46k over list price. Suspecting an appraisal problem, we counter with 'No Appraisal Contingency'. Many of us working Realtors are having to do it that way these days. Buyer counters back with willing to pay 10k over appraised value.

Couple of issues here. Well, really, that doesn't mean 'No Appraisal Contingency', and it really only means an offer for about 10k over list price as most of the time, if the seller listens, I price them where I feel there won't be an appraisal problem.

So, I go to the lender and ask a bit more about cash reserves and alternate financing for this buyer. How much can they pay over appraised value? How low of a down can they do and still afford the monthly payment?

So, with that 'Case in Point' splayed in front of you....what do you think? Are they allowing less down? Or is it that buyers have to be imaginative as they are paying over appraisal value?

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