We’re in a challenging marketplace…because of the low inventory, home prices are increasing month over month since January 2013, driven by home buyers eager to take advantage of incredibly low interest rates.
Since Fall 2012, Arlington and surrounding community home prices have increased by approx. 3-5%, due to high demand for housing in our area. Although these final home sale prices won’t be recorded for several weeks, the housing activity has made for significant impact in our marketplace. Many properties sold in March are receiving multiple offers and in some cases may exceed bank appraisals. Bank appraisers rely on recent sales (3 months or less) to determine whether a bank feels they can recover monies from a mortgage, should the homeowner fail to meet their obligation or become delinquent and a need comes to sell the home. It’s become difficult for bank appraisers to justify some of these mortgage requests.
The easiest offer will always be a cash offer with no contingencies; however cash offers aren’t common place in most real estate transactions. In all likelihood, a seller will need to review offers and weigh the various options of dollar amounts, time till closing, inspection and mortgage contingencies. A good seller agent will be prepared to add language to an offer to protect the homeowner, should there be disparity in the offer price and any mortgage concerns. Anytime a homeowner accepts an offer, there will always be some element of risk, so it becomes a matter of making the best choice possible, with proper guidance.
Offers of higher dollars figures may be incredible, but if the down payment is low, there’s a risk that a buyer may not be able purchase a home if appraisal come back too low. If this happens a home buyer will need to increase the down-payment, bridging the gap between 80% of the offer price and 80% of the appraised value, or walk away.
As buyer agents, we continue to coach buyers by suggesting an offer price range. However, the demand for housing and multiple offer situations have inflated prices. Home buyer emotions have impaired comparison pricing in our competitive marketplace. We are seeing some properties selling well over list price. In these cases, buyers need to prepared with additional funds to close on a property.
As an agent we want to provide you with the best suggestions when making an offer, however in the end it’s going to be a question of, “How much do you really want to buy this home…?
By James C. Trano & Adam Rosenbaum
Real Estate Agents / REALTORS® with CENTURY 21 Adams KC