In today’s real estate market, low inventory levels and high demand are driving up housing prices. As much as 54 percent homes receive bids above the advertised price based on the latest Realtor Confidence Index from the National Association of Realtors (NAR). Sean Telford, Chief Evaluator at CoreLogic, develops:
“The frequency of buyers willing to pay more than market data is on the rise.”
While this is great news for today’s sellers, it can be difficult to navigate if your contract price doesn’t match up with your home’s valuation. It is called assessment gapand this is happening more often than usual in today’s market.
According to the latest data from CoreLogic, 19 percent the assessed value of the houses was below the contractual value in April this year. it more than doubled percentage in each of the two previous April.
The table below uses the latest data from the NAR Realtor Confidence Index to show how often a valuation issue slowed or slowed home sales in May compared to May last year.
If the appraisal is below the contract price, the buyer’s lender will not lend them more than the appraised value of the house. This means that there will be a gap between the amount of the loan the buyer can get and the contract price of the house.
In this situation, both the buyer and the seller have a stake in the sale advancing with little or no delay. The seller will want to make sure the deal is closed and the buyer will not want to risk losing the house. This is why sellers often ask the buyer to make up for the difference in today’s competitive marketplace.
Whether you are buying or selling, a professional realtor can help you navigate the process and unexpected situations, including valuation gaps.