Do you know what the BIGGEST stumbling block is?

One word: Appraisal.

Yup. That's the big stumbling block. We get a buyer that wants to buy. We have a seller that is agreeable to the price proposed by the buyer. We do all the inspections. We apply to the lending institution The bank sends out the appraiser. The appraiser reports that they can't "find any suitable comps".

Now what? The bank sends a letter to the buyer and tells them that the mortgage application is denied because the house is not worth what the buyer and seller (and presumably two real estate agents) thought.

Rules and regulations tightly monitor and restrict what the real estate agents can do with the appraiser in the lines of saving the transaction. One of the most frustrating factors is that the appraisers are told they can't go any further back than 3 months. In many areas this means they really DON'T have any similar sales to use.

About the only solution is that the seller agrees to take the lower appraised price. If they can. Often they can't. Often they owe too much money. they'll end up upside down as they say in the business!

This recent re-occurrence is pretty difficult to avoid and predict.

So what can be done to safeguard against it ? My sources at 1stPriority Mortgage suggest that we avoid seller concessions whenever possible. Seller concessions as a general rule skew the actual fair market value, by adding thousands of dollars to the sale of the property.

I am counseling my agents to "think like the banks/appraisers" when obtaining a listing. That means doing an appraisal when speaking with a potential home seller that is more like what we can expect when the house goes under contract. This procedure is referred to in our profession as a CMA... comparative or competitive market analysis.

So, you as a home seller, need to make sure that the real estate agent who is pitching to get your listing is aware of these conditions. They need to be savvy and realistic in detailing their perception of where to list your property and what is the most likely sales price.

Appraisals. A tough pill to swallow right now, but it's real and it's here... right now. Be advised!

-Your friend in Real Estate... Steve