When supply is low and demand is high, contract prices can increase rapidly.
This is commonly referred to as a sellers market.
Many times, in a sellers market, homes have to be sold twice:
Often the second sale is more difficult than the first.
If the buyer needs a loan to complete the purchase, then the second sale can derail the first sale if the lender determines the contract value is too far above the current market value.
In addition, many neighborhoods have a high number of "fix-and-flip" properties where the original sales price (before improvements) is much less than the improved price.
When prices are surging, it is difficult for appraisers to find comparable sales to justify the contract price when performing the appraisal.
R.A.R.E. Agents know that the appraisal process can make or break a deal and always attend the appraisal.
There is a fine line between influencing the appraisal (illegal) and providing information to support the contract price (perfectly legal).
I always put together a packet for the appraiser and personally deliver it on appraisal day. The packet is professionally assembled in a presentation folder. It includes:
The most important part is what you say when you hand the packet to the appraiser.
I'll admit, delivering this information to the appraiser requires a fair amount of tact and skill, but after you do it a few times, it will become easier.
Don't chicken out! This is how you represent your seller and earn your commission.
THE BOTTOM LINE:
Rather than fearing appraisal day (as so many agents do), take control of the opportunity to represent your seller in the best possible way by attending the appraisal and providing information to support the purchase contract you negotiated for them.
That's what Really Awesome Real Estate Agents do.
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