Bidding war homebuyer beware: Appraisers not so eager Appraisals come in lower than buyers' offers

 Competitive homebuyers in hot housing markets are often facing a critical disagreement as they try to buy a house – the property appraiser doesn't share their opinion about how much the house is worth.

And that can leave homebuyers without the financing they need to close the deal.

The tension, between eager buyers and sellers and often conservative appraisers and bankers, is arising more in the hot housing market and the winners may be blinded by their victory.

There’s a good chance that buyers are so excited about getting the house they want that they’re willing to pay more than market value.

An appraisal is typically the value the mortgage lender will allow buyer to borrow against on the house. So when the appraisal comes in under what the buyers have agreed to pay, they may have to scrounge up the deference between their own funds and what the lender is willing to lend.

It's important buyers make sure they've completed their full application for a mortgage before making an offer, not just submit the initial pre-approval paperwork.
And something that the public should know about when they’re considering purchasing a home.

In competitive situations, many times buyers will increase their competitiveness by making their offer “firm.” But if they’ve gone into the offer without making it conditional on their loan coming through, they could be in trouble – facing a “lawsuit or loss of their deposit or both.

Steven Porter, CIBC Mortgage Advisor, steven@stevenporter.ca