'But, I have been approved'!!
Yes, YOU HAVE, but, the house you bid way over on HAS NOT. So, now, 60 days after you ‘won’, you’re now looking at losing. Throughout the market we heard, ‘I won!’ over and over again, but, really? What did you win? Honestly, we told our buyers to wait it out. If you sold and bought in that market, well, it tends to have been a wash as long as you were dealing with the same location. Selling high and buying low meant you had to sell in one of those key bidding war locales and buying in a lesser demand area. But, that also means knowing both markets. Knowing that you are bidding well over what the traditional home value is in its given CONDITION AND LOCATION are the factors that cannot be overlooked.
‘Be responsible’ we, as realtors, shouted. ‘Be aware’. Can you make up the difference of the bank’s appraisal value and what you paid if your bank assesses the home and it doesn’t hold up to what you paid? Many, many buyers dropped their financing conditions on the basis that they were approved for a certain amount of money. However, were you warned that the house may not appraise at that value? Beating a dead horse here, yeah, I get it but if you knew just how many times we tried to ensure a buyer understood.
Now, guess what is happening? House does not appraise = financing is NOT approved = buyer defaults on close = seller must relist home = buyer gets sued = undue stress on EVERYONE.