We're looking for our second and "forever" home in the Midwest, suburbs. Starter homes here go for $170-230k. We're looking at $350-400k. Problem is, many of these homes are just sitting for months, overpriced. Sellers aren't lowering prices. And financed buyers can't get appraisals to meet these high prices. There's not much competition for these homes as they're mostly higher earners. As a buyer, we're expected to cover a $20-40k appraisal gap. So frustrating!
Homes in our price range can't meet appraisal
byu/ImmediateJackfruit44 inRealEstate
Posted by ImmediateJackfruit44
14 Comments
Be patient. Sounds like the appraisers are doing buyers big favors, even if it doesn’t feel like it right now.
WE can’t help you. Sorry!
Are you sure these houses aren’t being appraised what they’re priced for? Not sure if you’ve gone through the appraisal process and personally went through it, but all the overpriced houses in my area are selling and being appraised at that overpriced value. Appraisals very rarely go under house value. I don’t find them very reliable.
Wait to buy. I keep telling everyone this but just relax and WAIT out the market. It’s going to be years of price cuts and slow sales. Eventually, sellers will relent and lower their expectations because they will have to. The real estate market moves in cycles and the cycles sometimes take a decade or more to play out.
Be happy appraisers are starting to do their jobs.
Could be worse. I remember going in house after house after house of foreclosures with holes in walls and half destroyed kitchens and bathrooms… because people were so angry banks gave them loans for houses that were appraised way over their actual value.
This happens when prices are on the way down.
At least you can buy a whole-ass house for what would be a 20-30% downpayment in many markets.
Stop whining and pay the extra if you find the forever home you want. Or if it’s not worth it, don’t pay it and wait for pricing to come down to actual values.
Make clear in your offer that you will not be paying an appraisal gap. If your offer isn’t accepted, so be it. If your appraisal comes in low, the seller will have to cancel or meet the number. Sure, it may slow down your purchase, but you won’t overpay and you won’t burn through your cash up front.
Note: if you have a really good mortgage person and were already planning a fairly large down payment, your mortgage person can move some numbers around on paper to make things work if the number is low.
Sellers will wait a LONG time, sometimes a very long time, before reducing prices.
Just be patient, is my advice. If the market there is really slowing, then you’ll be in a much better position once people get the memo.
I’d keep looking, and making realistic offers, when you see something appealing. If you sit it out, you might miss something good. It’s frustrating yes. But it’s better than a situation where buyers are willingly paying those prices and they just keep climbing.
Interesting. It’s fairly uncommon for higher end homes in a given area to not meet appraisal, and even more so if the market is slow. It’s more common that a house may have a sale price above an appraisal if there was an intense bidding war.
You may want to check if this is happening with other lenders. While the appraisers are technically independent from the lenders, they are ultimately hired by the lender.
Love to see it. Homes that are realistically valued $300k-350k should not be priced or bought at near $450k.
We aren’t serious buyers but I do look often and notice that homes are sitting for months and sellers refuse to lower the price significantly. There is a home I would love but it is so overpriced. The family purchased it for 545k in late 2022 and are trying to sell for over 700k with no major improvements. The home is newer. I just don’t understand how it could appreciate almost 200k in three years!?
Sellers are all convinced that “home prices only go up” and that ”you can always rent a property for enough to cover the mortgage”
No one ever thinks about what happens when they buy the top of a market with high interest.
Most sellers who refuse to lower prices are doing so because they actually can’t afford to take a lower offer.
People wondering why Zillow says they have $100k in equity can’t break even on a sale