Bidding Wars can equate to low appraisals.
In is not uncommon to have low home valuations in a hot real estate market. The reason is because home appraisals are largely based on comparable home sales that closed prior to the home you’re buying. In a real estate market where supply can’t keep up with the demand, which is what our current market is doing in Portland, home buyers are getting into bidding wars on almost every transaction. These bidding wars drive prices up.
In hot markets, it becomes virtually inevitable that home values will at some point be unable to keep up with how quickly homes are selling. The result – lower-than-expected appraised values. That’s when all parties involved suddenly get headaches at the same time.
There are a couple of different things that can happen if the property you’re purchasing comes in low: You can terminate the deal and walk away. Or you can renegotiate the purchase price with the seller. Whether you are the buyer or the seller, it can be a major heart-breaker to have a deal fall apart due to a low appraisal. Deciding upon which route to take is an emotional journey. My best words of advice: Try your best to stay calm, trust your real estate agents years of expertise to help find a solution and think clearly about the end result.
