Sellers think twice about high offers
In some markets, lower is better
By Dian Hymer, Monday, July 6, 2009.Sellers who are lucky and receive more than one offer should carefully consider all aspects of the offers before accepting the one with the highest price. Even if you receive only one offer and it's lower than your asking price, you might want to consider bending some on your price in exchange for a transaction that is likely to close.
Ideally, you want a committed buyer who has a good credit score and financial resources, and who has been preapproved for a mortgage, as lenders have tightened their qualifying criteria considerably.
HOUSE HUNTING TIP: Your real estate agent should ask the buyer's agent for permission to contact the buyer's mortgage person directly to find out if there is any reason the buyer wouldn't receive credit approval. An offer from a gold-plated buyer at a lower price may be a better deal than a higher-priced offer from a marginally qualified or low-cash-down buyer.
Another issue to consider if you receive more than one offer is the likelihood of the property appraising for the higher price. Appraisals have become a problem recently, particularly in declining markets. Appraisers make downward adjustments for properties that are deemed to be in declining markets.
Are there at least three comparable sales that closed within the last three months that can be used to justify the buyer's offer price? If not, the appraiser might have difficulty appraising your property for the purchase price.
Buyers usually include an appraisal contingency in their offer. If so, the buyer usually has the option to withdraw from the contract if the property appraises for less than the contract price. Some buyers won't buy a home that appraises for less than they've agreed to pay.
A buyer who is committed to making the deal work is more likely to be able to accept an appraisal that is lower than the purchase price. In this case, the buyers and sellers negotiate a mutually acceptable resolution. For example, the sellers could agree to accept a lower price if the buyers agree to increase their cash down payment. ...CONTINUED
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Submitted by Barry Noble on July 6, 2009 - 3:02pm.
Again before there are comments about how wrong the appraisers are -
Appraisers watch, study and interpret the Markets, and in a rising Market, show the value increases that reflect that Market cycle. Likewise, in a continuing, declining market - despite the wishful thinking of the agents and sellers, the appraisers must conservatively and accurately reflect, in their opinions of Current Market Values, the DECLINING Market values effects, and yes, short sales and foreclosures in the large numbers that are showing up - DO AFFECT the general Current Market Values, in a negative way.
It's not the appraisers' fault - it's not the appraisers' doing - they only interpret the Market - but the bearers of bad tidings are always the messengers the recipients want to shoot.....it's been like that since pre Ancient Roman and Greek times.
It's better to learn before you buy, that the residence is worth less than you are being asked to pay - or face later, further possible and continuing declines, resulting in a home that is worth less than the mortgage you owe.
Yes, the Market is cyclical and - unless there is an unforseen major economic or natural disaster, yes it will again turn up and rise to new value heights. Problem with the last up-swing in the cycle, it rose too high and floated off into inflationary clouds - then it rained!
Barry Noble http://www.MyPropertyIsWorth.com