Lake Lanier Blog

September 13th, 2020 9:03 AM
Homes flying off the shelves? Appraisals falling short? Buyers Overpaying?
Who would have thought in their wildest dreams that a Pandemic could cause such a frenzy of Real Estate Activity and Rising Sales Prices!

Economics 101 right? Low Supply, High Demand...Prices skyrocket! That is exactly what has and is happening. Whether it is people escaping packed tight city life due to Covid or out of towners looking for reasonably priced lakefront property compared to NY, Chicago or California...Properties are selling as fast as the signs goes in the yard or even BEFORE.
**Side note: If you do not place your sales in FMLS or MLS the Appraiser will not know about them and this could HURT your sale when they cannot find good recent comparable sales. So please do not leave sales out of FMLS/MLS.
So what does this all mean when it comes to Appraisals? You are likely seeing them come in BELOW the sales price. Let us be reminded sales price does not automatically correlate to Market Value and the appraisal should not necessarily come in at the Sales price. Other factors come into play where the definition of market value is concerned, such as Buyers acting in their own best interest and not under undue pressure to buy (such as losing out on homes because of limited supply and others putting in offers on those homes they want).
What I am seeing is FAST upward movement which quite frankly scares me for the Buyers. If you are a Buyer's Realtor it should scare you too. They are relying on your expertise and I know many of you have already said to yourself "I am surprised that home sold for that much"! I certainly have said that.
Multiple offers, cash buyers, sales over list price, escalation clauses, appraisal contingencies waived, are all on the table these days even for the over 1 million dollar properties. This is NOT good for the Buyers and they should be counseled accordingly.
Appraisals work in the past, even if it is only 2 weeks in the past. YES, we can and DO make market change adjustments to catch up with the market increases, but remember we are protecting the lenders risk and they have requirements of us. If we are making across the board UPWARD market change adjustments they will get very nervous about their future risk if the market corrects.
As for cash buyers we are protecting them and their investment as we should.
If we continue to have steep upward trends in sales prices...what goes up will come down, we know this all too well from past history.
If you have a Buyer who you have counseled that does not care if they are over paying for a home based upon all the most recent sales and even the pending ones, then so be it. But please do not be surprised when appraisals come in short of the sales price, this does not mean the appraised value is "low". It only means the comparable sales could not support the sales price the buyer was willing to offer the seller. Remember please that sales price does not always equate to Market Value.
I wish you all well out there. Stay Healthy and Happy!
We continue to follow all CDC guidelines in our business by wearing masks, social distancing, using hand sanitizer and we also wear gloves during our appraisal process. We never stopped working during the shut down as we were considered essential workers as an arm of the Lending Institutions and we are blessed thus far to remain healthy. We have been very busy as many of you have been and we are thankful for the work and all of your referrals.
** We are providing UPDATED Appraisal reports for many who may have had one just prior to the shut down due to Covid as values in most areas have increased since that time. So call on us if you need that service for your clients.
Again, Thank You for your business, we appreciate your trust in us!


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