"To Support, or Not to Support....Contract Price. That is the Question!"
The market is heating up and listings are pulling in multiple offers, some of which exceed asking price. Sounds like a good problem to have, right? On the surface, it may seem so. Who wouldn't want to sell their home for more than they’re asking? But beneath the surface, where banks and appraisers play, brews an entirely different issue: support for the contract price.
“A willing buyer and a willing seller” is the definition of market value; however, when not paying cash, lenders (and the GSE’s) require something more than just 2 parties who come to an agreement on price.
The sales comparison approach is the most widely used when determining an opinion of value; using closed comparable sales, in close proximity, and with similar characteristics that have recently sold.
Without supporting comparable sales data for the contract price, “market value” for the lender means very little. Appraiser’s who opine a value slightly below contract price fall into the “no one is that good” category; come in too high, and they run the risk of being tagged for overvaluation by the GSE’s.
Despite popular belief (insert chuckle here), appraisers aren’t out to blow up a deal. And AppraiserVendor is here to help. With our pre-delivery Purchase-Price Validation built into our QC process, AppraiserVendor arms itself, and our clients with the tools to ensure that there is market support for that agreement between buyer and seller.
At the end of the day, we all want the same thing; to see a successful real-estate transaction that ends with someone moving into a new home…but not at the cost of another market collapse. Let us tell you how we can help you!
