Now What’s Your Excuse?

We all know that interest rates are low, but it seems like that’s been the topic in the media for years now. It’s almost mundane and expected. So why would I bother repeating it? Because 30-year mortgage rates are the lowest ever! One of my buyers just locked in a rate of 3.75% and the bank is paying him $5,200 in closing costs to take that rate. (He is buying a $290,000 house with only $10,000 down and no closing costs.) The AP reported last week that 30-year rates dropped to 3.67 percent, the lowest since long-term mortgages began in the 1950s. The 15-year mortgage rate dropped to 2.94 percent. So potential buyers, now what are you waiting for? Call “Definitely Dave” today at 303-442-5001 if you’re ready to own real estate in Boulder County. Don’t kick yourself later when you’ll have to pay more.

With a Change in the Market Comes a Change in Appraisals

A lot can happen in a few years, as evidenced by the real estate market of the past decade. As a backlash to homes being over-valued and borrowers over-extended, I’m seeing a far different outcome for some home appraisals. The Wall Street Journal ran an article last week, “Fighting Back Against Lowball Home Appraisals.” As the headline suggests, home buyers and would-be refinancers are running into appraisers valuing their home far lower than it’s really worth, hindering any chance of taking advantage of today’s low interest rates.

In my situation, last month I was working with a seller to get his house in Gunbarrel ready to list; at the same time, buyers who I’ve been showing homes to for the past 11 months expressed interest in seeing this house. It wasn’t officially on the market yet but my buyers loved it and both parties happily agreed on a purchase price. Then comes the appraisal needed for my buyer’s loan…standard procedure and I’m not expecting any surprises or hiccups here, but the appraisal comes in 5% less than the agreed upon sale price! We ask for a re-appraisal but the lender doesn’t budge on the appraised value. Now, these buyers of mine are very savvy and have seen just about everything out there, so they know exactly what they want and how much they’re willing to pay for it. In other words, they know they’re paying the fair market value for this home. To better prove that it is priced in line with the current market, I received plenty of calls from other realtors showing interest in it.  

The good news is that we have been able to find a successful workaround which works for both the buyer and seller.  Creative problem solving and experience, combined with the cooperation of all parties, have kept this deal together and a win-win for everyone.  When choosing an agent in any market it is critical to hire someone with both the knowledge and drive to see a deal from start to finish.

So do today’s appraisers have good intentions but bad data? Part of the problem is that finding a truly comparable sold property can be difficult, especially if the sale is not recent (past several months).  And many appraisals are simply an exterior “drive by” which makes it impossible to know of any recent interior updates. I think what we’re experiencing now is a kink in the appraisal process that will eventually work itself out once appraisers and the public in general have their confidence restored in the improving real estate market. Until then, this issue may resurface. After all, a home is only worth what someone is willing to pay for it.