Currently there is not a lot of inventory available and many homes are having multiple offers on them. After viewing several homes, my buyers decided to place an offer on a house for the list price and request closing costs. They felt the list price was fair and if they received the closing costs then they would have a good deal.
The offer was accepted and the inspections and the appraisal were ordered. The inspector found only minimal items wrong with the property. The appraiser measured the house and discovered it was slightly bigger than the county records. He also found only a few comps and called me to ask if I had other comps. I shared what I had but he was not satisfied, so he called the listing agent. This sometimes occurs in an appreciating market.
The appraiser told me he was coming in several thousand dollars low and I wanted to cry. Then the strange thing happened. The listing agent got a call from another appraiser wanting to do an appraisal on the same house. We called the first appraiser back. He said, yes he had been out to the property and couldn’t get the value or didn’t feel comfortable with the comps he had to use, so he rejected the appraisal. There would be no charge to the buyer.
A new appraiser came out and was able to substantiate value for the sales price and we were able to close.
Once again I reiterate an appraisal is an opinion of a third party as to value and condition so the bank knows that the collateral they are lending against has merit. A property like anything else is only worth what someone is willing to pay for it. I do not believe that the buyer overpaid for this property. I do believe that there were few comps to review to make a decision on whether the bank was loaning on a property that had the value to use as collateral.
Some may ask why the disparity between appraisers. Appraisers determine value of the property based upon the contract and the other properties in the immediate area. Appraisals are always comparing properties looking backwards for homes that have sold within the past several months. If inventories are low then the market may be appreciating and the comps from a few months ago will be lower. In a market that is increasing or decreasing in value, this can always be a little tricky especially if there is limited inventory.
If you are interested in buying or selling a home, please feel free to contact me at 405-213-2992 or http://www.sandiwalker.net
Supply and Demand is at work in real estate like normal. The market has turned and there are fewer homes on the market than what buyers are demanding.
In a balanced market we like to see a six month supply of homes. This means that if no other homes came on the market, all of the current inventory would be sold in six months. If the number of homes falls below the six month supply, we say we have a sellers market and if the supply is above the six month supply, we have a buyer market.
The supply amount differs between location within the city and the price point. Properties in our market below $200,000 are currently experiencing a drastic seller’s market with many properties on the market a very short time. And since there are more buyers than sellers the prices have been increasing. In an effort to get a home, buyers have to compete with other buyers in multiple offers. Multiple offers tend to drive the market price upward.
Why do we have so many more buyers than sellers? In my professional opinion it is because buyers believe the market is improving and want to buy before prices increase dramatically or interest rates increase. In addition, we have several people who decided to rent after last years storm, their leases are coming do and they may be ready to reenter the market. Rents have been going up and it makes more sense to buy than pay high rent. In addition, unemployment is low and jobs have been moving into the metroplex which increases demand for housing.
As sellers become aware of the market turn, more sellers will enter the market. With more homes for sale, the market will even out somewhat over time. However if you are ready to sell your property, the time is now. Take advantage of the buyer demand before more sellers enter the market and get your home sold fast.
If you have questions about selling your home, please call me today at 405-213-2992 or visit my website at www.sandiwalker.com.
All HUD properties are foreclosures where the original loan was a FHA loan backed by the government. The properties are owned by the federal government and managed by Housing and Urban Development. These properties come in a variety of conditions but are always sold “as is”. In order to get a list price, HUD hires an appraiser to determine value in “as is” condition. This is done in consideration of a new FHA loan. If there are certain deficiencies like no carpet, broken windows, plumbing issues and such; the FHA appraiser will determine a value to repair those items. If the amount is over approximately $5000 then the house will be listed as uninsurable and will not be eligible for a new FHA loan. The exception would be a FHA 203K loan provided there is no structural issues. If the repair amount is less than about $5000, the appraiser will list those items and require an escrow amount equal to the repairs.
The list price is the FHA appraisal amount. This is important to note, because if the buyer bids above the list price and is obtaining FHA financing, they will need to bring the difference to the table. If the buyer is obtaining conventional of VA financing, then a new appraisal will be ordered. Provided the conventional or VA appraiser can find comps to justify a higher sales price the sale will continue as normal.
In a strong seller’s market like we are in today it is not uncommon to see buyer bid above the asking price. If a lot of buyers are interested in a certain property, it may very well sell above list price by several thousand dollars.
HUD always looks at the net to seller amount so if the buyer is asking for closing costs this will lower their net bid by that amount. I have had buyers ask if they can raise the sales price and then ask for closing costs—making their net bid higher. Remember, if the buyer is going to obtain a FHA loan then the buyer will need to bring the amount above the list price to the table. Why not just have the buyer pay their own closing costs and write a clean contract.
If you are thinking about buying a HUD property, please contact me. I specialize in these types of properties and know how to get them closed. Sandi Walker 405-213-2992 or visit my website, www.sandiwalker.com