Everyone is aware by now that mortgage interest rates have skyrocketed-
As a Certified Residential Appraiser, it's my job to stay up to date on what is happening in mortgage lending nationwide. An appraiser who does not analyze mortgage trends and interest rates is not fully analyzing the real estate market.Interest rates on purchase and refinance loans have more than doubled in the past 18 months. Changes in my local market that I am seeing include:
*Homes are not receiving 10,15, even 20 offers by competing buyers as was the case when rates were very low.
*Homes are not receiving offers the same day as listed as was the case when interest rates were very low.
*Homes are not selling over list price as much as they were prior to early 2022.
*Sellers are offering monetary concessions to buyer's to buy down their interest rate or help pay closing costs.
These things are not seen in all sales of course, though in my area the above scenarios were practically non-existent prior to early 2022. These scenarios have become more and more common over the past 6 months.
What can a homeowner do to get an update on the local market?
If you are thinking of selling your home, but not sure exactly where the market trends are or what impact the higher interest rates have had on your property value, I strongly suggest you have your home appraised by a Certified Residential Appraiser who is knowledgeable about your specific area. If you over price your home, it could sit on the market and prolong the inconvenience of allowing strangers to walk through your home. I am aware that homes which sit on the market too long, often turn into a "market fixture" which ultimately buyer's shy away from because they think there might be something wrong with the house. If you under price your property at a time when sellers are becoming somewhat worried about the interest rates and accept the 1st offer that comes along, you could be losing valuable equity. A full appraisal of your real estate by a
Certified Residential Appraiser will give you an unbiased and educated opinion supported by factual data relevant to your specific property.
What should buyers be aware of?
Buyer's in the market to purchase a home should be very aware that many lenders are offering appraisal waivers. This means the lender is willing to use an Automated Valuation Model as a basis for making a lending decision. This is very bad for perspective buyer's. Particularly now when interest rates have risen so much and many markets have transitioned from increasing prices to stable prices. It is not known if this will progress to declining real estate prices. Thankfully, I have not seen this yet, though the future is not so clear in the real estate world. If your lender offers you an appraisal waiver, say "NO THANK YOU"! Better to pay for the appraisal now then buy a home at a price more than its market value. When it comes to automated valuation models, it's the borrower, you, who pay the piper in the end. Your lender will not help you if you pay more for your home than you should have. Why do lenders offer appraisal waivers and opt for an automated valuation? They don't want to wait for the appraisal. It is that simple. The loan process allows for ample time to obtain an appraisal. Demand yours! Even if you are paying cash for your home purchase, do yourself a favor and get an appraisal!