I'll Pay 12K Over Appraised Value - Huh?

 What Buyers and Sellers Need To Know About the Appraisal Gap

It’s economy 101 – when supply is low and demand is high, prices naturally rise. That’s what’s happening in today’s housing market. Home prices are appreciating at near-historic rates, and that’s creating some challenges when it comes to home appraisals.

In recent months, it’s become increasingly common for an appraisal to come in below the contract price on the house. Shawn Telford, Chief Appraiser for CoreLogic, explains it like this:

“Recently, we observed buyers paying prices above listing price and higher than the market data available to appraisers can support. This difference is known as ‘the appraisal gap . . . .’”

Why does an appraisal gap happen?

Basically, with the heightened buyer demand, purchasers are often willing to pay over asking to secure the home of their dreams. If you’ve ever toured a house you’ve fallen in love with, you understand. Once you start to picture yourself and your furniture in the rooms, you want to do everything you can to land the property, including putting in a high offer to try to beat out other would-be buyers.

When the appraiser comes in, they look at things a bit more objectively. Their job is to assess the inherent value of the home, so they’re going to study the facts. Dustin Harris, Appraiser Coach, drives this point home:

“It’s important for everyone to understand that the appraiser’s job in the end is to remain that unbiased third party, to truly tell the client what that home is worth in the current market, regardless of what decisions have been made on the price side of things.”

In simple terms, while homebuyers may be willing to pay more, appraisers are there to assess the market value of the home. Their goal is to make sure the lender isn’t loaning more money than the home is worth. It’s objective, rather than emotional.

In a highly competitive market like today’s, having a discrepancy between the two numbers isn’t unusual. Here’s a look at the increasing rate of appraisal gaps, according to data from  CoreLogic (see graph below):

What does this mean for you?

Ultimately, knowledge is power. The best thing you can do is understand appraisal gaps may impact your transaction if you’re buying or selling. If you do encounter an appraisal below your contract price, know that in today’s sellers’ market, the most common approach is for the seller to ask the buyer to make up the difference in price. Buyers, be prepared to bring extra money to the table if you really want the home.

Above all else, lean on your real estate agent. Whether you’re a buyer or seller, your trusted advisor is your ally if you come up against an appraisal gap. We’ll help you understand your options and handle any additional negotiations that need to happen.

Bottom Line

In today’s real estate market, it’s important to stay informed on the latest trends. Let’s connect so you have an ally to help you navigate an appraisal gap to get the best possible outcome.

Santa Clarita Home Sales Activity - August 24, 2021

If you follow me on Social Media, you know I just put a sweet family into escrow. We've been working together for 6 months to find a home. We hadn't written an offer for the last few months because....well.....the market was insane! We'd go look at houses, the seller would get a dozen offers in, usually about 10% over list price too!

Well, fast forward to now, and we wrote an offer about 3% over list price, there were only 4 offers in. And, we settled 4% over list price to open escrow today. Win for my peeps!

So, not surprising will be that our housing inventory has climbed a good amount! Last month this time we only had 254 active homes available for sale. Today? We have THREE HUNDRED & FIFTY NINE! 

Yeah, that's pretty exciting for me to help buyers get into escrow. A little more challenging for Sellers to get what they could have gotten at the beginning of '21.

Currently we have 29 homes in that Coming Soon category, where sellers are finishing up getting ready for market. We have 547 homes in escrow & we have closed on 441 properties in the last 30 days.

If you want more information, breakdown, opinions, about SCV Real Estate...just holler!

~ Lauren@KeepYourWitz.com / (661) 313-5470 ~

Thinking About Selling Your Home To Zillow? DON'T!

I'm in the middle, well almost at the end, of an escrow. We were scheduled to close tomorrow, 8/19/2021. Were being the key word.

There is a chain of transactions. There was only supposed to be two, but Lo & Behold, there are three. And, the third one is a Zillow home purchase. Zillow is purchasing the furthest buyers home....now.

I'm representing one seller, our buyers are selling their home to buy ours. Their buyer came in non-contingent and was to do a bridge loan with a local lender. That's the way the contract read.

Back in the old days, people changed their financing so much that the California Association of Realtors added a paragraph to the CONTRACT (people take the purchase agreement so lightly, but it is a contract people) that the stated financing was exactly what was going to happen. Well, that's what it says in layman terms.

So, late last week, the other listing agent and myself find out that those buyers are in fact not doing a bridge loan, but are selling their home to Zillow. Well, it actually turns out somehow Zillow is selling it to some buyers. Yes, Zillow can do that now.

This is in fact a breach of contract, but we just want to close, so we're kinda stuck now!! 

So, here we are, a day before closing and the Zillow sale is mucking up everything. The people over there don't know what they are doing, they didn't even seem to know about our escrow. The sellers of the home are befuddled with the poor online contract system. Kept getting booted out of the Zillow program during an important phase of the process. The Sellers agent that is representing them in the purchase is not part of the Zillow mess so the homeowners are basically trying to tackle it on their own.

AND, our poor escrow team is busting their hump just trying to communicate with the Zillow peeps to get everything squared away....and Zillow is a mucky mess. A very yucky, mucky, mess.

And, of course, due to the delay, our buyers had to reschedule their plans for moving into my sellers home. 

Listen to me when I say this! Oy, Zillow = NO.....again!!! 

What Goes Around Comes Around - Good or Bad

I heard about this last week, wasn't surprised. Was quite disappointed though, to the point of being angry.

Anger is a bad emotion to have, for any reason.

But, when the big Housing Wire writes about it too, it's a big deal.

"Former marketing rep provided real estate agents with video marketing and information on pocket listings"

One of our local title reps caused his company to have to pay over a million dollars in fines for the alleged illegal perks to Realtors.

And, from personal experience with this guy? It's true, well, my interaction with him at least.

Many years ago it was okay for affiliates to 'help' us. I actually worked with this rep, but parted ways when he did something awful.

I was approached by he & his advisory group on more than one occasion to join the crowd. When he called me about it, he distinctly said I would be expected to use the services of the affiliates. Regardless of the relationships and trust I had with others, I was expected to use theirs. No thank you. When an associate of mine in the group called me again this year about it....I said "Is he still part of the group?" Yes he was, I said no thank you again.

It's weird to me how people just think doing things against the law are ok. My profession isn't always thought of so highly, and this guy just stunk it up a bit more.

I've had people over the years think that I get a 'kick-back' if we use a particular affiliate. I tell them it's illegal to do so, and I don't do it. The affiliates I refer to work hard, and honestly, for my clients. That's why I refer to them. Trust, hard work, high ethics, those are important to me.

At any rate, if you want to read the whole HW article, here ya go:

Read About The Turd Title Rep Here

Any questions? Just holler. Lauren@KeepYourWitz.com

Thoughts From Experts! What Are Yours?

Key Questions To Ask Yourself Before Buying a Home

Sometimes it can feel like everyone has advice when it comes to buying a home. While your friends and loved ones may have your best interests in mind, they may also be missing crucial information about today’s housing market that you need to make your best decision.

Before you decide whether you’re ready to buy a home, you should know how to answer these three questions.

1. What’s Going on with Home Prices?

Home prices are one factor that directly impacts how much it will cost to buy a home and how much you stand to gain as a homeowner when prices appreciate.

The graph below shows just how much experts are forecasting prices to rise this year:Continued price appreciation is great news for existing homeowners but can pose a significant challenge if you wait to buy. Using these forecasts, you can determine just how much waiting could cost you. If prices increase based on the average of all forecasts (12.46%), a median-priced home that cost $350,000 in January of 2021 will cost an additional $43,610 by the end of the year. What does this mean for you? Put simply, with home prices increasing, the longer you wait, the more it could cost you.

2. Are Today’s Low Mortgage Rates Going To Last?

Another significant factor that should inform your decision is mortgage interest rates. Today’s average rates remain close to record-lows. Much like prices, though, experts forecast rates will rise over the coming months, as the chart below shows:Your monthly mortgage payment can be significantly impacted by even the slightest increase in mortgage rates, which makes the overall cost of the home greater over time when you wait.

3. Why Is Homeownership Important to You?

The final question is a personal one. Before deciding, you’ll need to understand your motivation to buy a home and why homeownership is an important goal for you. The financial benefits of owning a home are often easier to account for than the many emotional ones.

The 2021 National Homeownership Market Survey shows that six of the nine reasons Americans value homeownership are because of how it impacts them on a personal, aspirational level. The survey says homeownership provides:

• Stability
• Safety
• A Sense of Accomplishment
• A Life Milestone
• A Stake in the Community
• Personal Pride

The National Housing & Financial Capability Survey from NeighborWorks America also highlights the emotional benefits of homeownership:Clearly, there’s a value to homeownership beyond the many great financial opportunities it provides. It gives homeowners a sense of pride, safety, security, and accomplishment – which impacts their lives and how they feel daily.

Bottom Line

Homeownership is life-changing, and buying a home can positively impact you in so many ways. With any decision this big, it helps to have a trusted advisor by your side each step of the way. If you’re ready to begin your journey toward homeownership, let’s connect to discuss your options and begin your journey.