What to Do When Your Property Value Kills a Sale
Despite many improvements in the housing market home sellers are still falling apart in big numbers due to property values or at least appraisals. What can homeowners do when they find themselves in this situation?
Of course for underwater homeowners who owe more on their homes than they are worth it really doesn’t matter if appraisals are low as the only way you are walking away with cash is if your lender checks you a check for relocating.
The big challenge is for those who do have some equity and can’t afford or bear to let their homes be sold for anything less than what they are asking for. The good news is that in many cases low appraisal reviews (where most of the issues arise) can be rebutted by the original appraiser or a second appraisal can be ordered to justify the original property value. Home sellers should als pay close attention to any transactions in their immediate area and provide the details to the buyer’s agent, as well as any documentation of improvements which have been made to the home.
In some cases however, it may be a matter of needing a better original appraiser, a stronger agent or a mortgage broker with more clout and savvy to make the deal happen. Perhaps you need to be pickier about who you accept offers from.
On the bright side, unless there was a financing or property value contingency in the sales contract sellers ought to be entitled to claim any deposits made, though this certainly may not be the nice thing to do. Perhaps it’s not fair to punish buyers because your home didn’t appraise.
If you have been through this cycle a couple of times already, you definitely need to be seeking buyers with more cash who can pay the difference and aren’t relying on FHA, low down payment type financing. You can clarify this in the contract. The good news is that there are plenty of hungry, cash rich buyers out there is your home is priced right.
If your current property value is just not cutting it, do the math and determine whether selling your home fast for cash is the best move. Trying to wait out the market and expecting your property value to bounce back to its 2005 price tag is probably just going to lead to frustration. Think about it. If your property value dove 70% in the last 7 years, for example from $100,000 to $30,000 and real estate averages 5% appreciation a year (hoping it doesn’t actually decline further, which it may well do), it is going to take an extremely long period of time to get back. Certainly not soon enough to avoid foreclosure. In this example, even if your home soared in value by 70% in the next 2 years, it would only be back up to $51,000.
For many selling for cash fast may be the only viable option…