During the last housing boom, appraisals were inflated in order to drive home prices higher, to take advantage of the large number of investor-flippers buying up property at the time. When the market crashed, appraisers were careful to avoid overestimating the value of homes and now tend to underestimate, meaning that for mortgage-dependent buyers, the appraisal and contract price of a home don’t always match up. When this happens, the buyer doesn’t get the mortgage and the deal usually falls through. Young first-time homebuyers are being hit the hardest by this trend, because they tend to utilize mortgages more than most, especially low- down payment loans.
The issue of gaps between appraisals and actual home values is also exacerbated by the sheer lack of appraisers to go around. There simply aren’t enough appraisers to handle the current market, and prices are rising faster than they can keep up. Those currently in the industry are having to deal with regulations, compensation issues, and a changing market structure. There aren’t many incentives to draw more professionals into the industry to take up the slack, causing appraisals to lag behind the market. If you’re a cash buyer, take advantage of this trend to beat out the competition and secure the property you’re after!
For more information on appraisal issues, the current Ocala market, and the pros and cons of buying cash, contact a Showcase team member. We’re constantly monitoring the local Marion County and national markets, and gathering information on the latest trends to help you succeed in all your real estate goals.
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