As housing inventories are shrinking and prices are climbing, appraisers are now valuing homes at or above their selling price, allowing for more deals to go through.
During the bust, housing sales were often on the line with the chance of an appraisal coming in too low. For example, if a home cost $400,000 and required 20% down payment of $80,000, the buyer would be needing to finance the other $320,000. However, if the appraisal came in low, at $350,000, they would only be eligible to finance $280,000. This would force them to come up with an extra $40,000 somehow to make the deal go through. Most buyers wouldn’t be in the position to come up with that extra cash.
Now, many appraisals are even coming in above the selling price and creative strategies are not longer needed to potentially get around low appraisals.
Click here to read the full article and to see some examples from agents about their experiences with appraisals now and during the bust.