Chandler Home Bidding Wars Cause a Bit of a Dilemma

Chandler home bidding warsFlashback to 2005.  Have a home for sale in Chandler.  You call your agent and have 30 offers before the sign even goes up and accept an offer for 10-15% over list price.  No problem.  Buyers were willing to bring in the cash to make up the difference between the sales price and the appraisal.

Fast-forward to September 2009. Have a home for sale in Chandler and you don’t owe more than the home is worth?  Great!  Your home is worth $300,000 or less and is move-in ready and looks nice too?  Even better.  You list your home pretty close to what it will appraise for and get 5-10 offers within the first week.  Some offers will be above full price but buyers are still relying on being protected by the appraisal, which may come in lower than the sales price.  Many smart buyers that are paying cash are still asking for an appraisal to be done to ensure they are not paying “too much” for the home. 

Let’s say you accept an offer with conventional financing and the appraisal comes in for less than what the buyer paid. So now what?

1. You can lower the agreed upon sales price to meet the appraisal price.  

2. You can split the difference with the buyer if the buyer is willing and able to bring in the additional cash.

3.  You can hold firm on your price and hope the buyer will be willing and able to pay above the list price.  Psychologically, this may be hard for the buyer as everyone now holds a deep-down fear of owning a home that is worth less than they paid for it.  Often this strategy results in the buyer walking away. 

This is just one scenario.  There are a lot of factors that play into how the appraisal of your home is going to affect your transaction.  Things like the buyers down payment amount and the type of financing the buyer is obtaining.  You should rely on your real estate professional’s help and advice with your individual situation.

Bottom line.  Even though multiple offers are coming in.  Your home still has to appraise and your buyer is likely to be in a different mindset than the buyers of 2005.

Comments

  1. This blog is really helpful! Indeed everyone needs an expert to appraise their home since people nowadays are more careful in buying a house.

  2. Hey JR~
    Absolutely. I recommend an appraisal to even my cash buyers. Thanks for your comment!

Trackbacks

  1. […] The buyer can waive the appraisal contingency, and in today’s market with the new appraisal rules, some seller may find this offer very […]