Consistently Outbid in Flower Mound, Grapevine, HEB, Trophy Club

[WorldKlas]

Originally Posted by Katana49

Correct.

A cynical way of looking at it is that yes, it's like throwing money away, because as far as the lender is concerned, you're paying too much if the contract is for more than the appraisal. That's why you can claim that your home has depreciated instantly. It really hasn't, it's just that the buyer has overpaid as far as they appraisal goes. It also doesn't count as increasing your equity on the balance sheet either, because the home's value has been pegged at the lower appraisal value.

All it really ends up meaning is that you're not enjoying any gains in equity until your home is valued at your contract price or higher, which may take a year or two. In this market, that hasn't been a problem for buyers.

Another comment or 2 to add to the above very correct explanation.

*in a "normal" -- not hot -- market, the burden typically fell on the seller to adjust the contract price down to the appraisal in order to complete the deal because the seller knew neither this or future buyers were likely to pay more than the mortgage company's appraisal of the value of the property. So buyers who have been past purchasers are often going into the market with budgets that are not cash rich enough to fund the shortfall between appraisal and contract price. So buyers need (again, in a hot market) to have the funds available and possibly have to buy cheaper houses to be able to come up with the cash needed.

*buyers don't have to make offers that include contract language regarding appraisals. They can simply make their bids and address any appraisal issues once the appraisal comes thru. By making a high bid, and negating it with "if the appraisal fails to support the bid price, I will cover up to $15K of the shortfall" the bidder sets himself up for having a seller perception of a shaky bid.

[Katana49]

^^^^ Good points as well.

[Rakin]

Originally Posted by WorldKlas

*buyers don't have to make offers that include contract language regarding appraisals. They can simply make their bids and address any appraisal issues once the appraisal comes thru. By making a high bid, and negating it with "if the appraisal fails to support the bid price, I will cover up to $15K of the shortfall" the bidder sets himself up for having a seller perception of a shaky bid.

TX RE Commission has cracked down and forbid us agents from now making language like this in a contract. An attorney is now required if you want to insert since language like this is considered practicing law.

Remember the old days of a seller paying Buyer closing costs? We can now shift to Buyer paying Seller closing expenses as an option.

Since we can no longer have this language in the contract it just needs to be understood between the parties. It does create issues.

[BigDGeek]

Originally Posted by calgirlinnc

This entire thread has me freaked out. I wonder how many lurkers are reading this and, like me, are wondering if it's even worth it to relocate.

It isn't. If you're happy where you are, stay there.

Originally Posted by Gravy Train

Ha! How about DFW natives who are eager to buy their first home or upgrade in this market? We're full, please stay wherever you're lurking from.

Yeah really. We are staying put simply because we don't want the hassle of having to buy in this market. It's insane. We thought about it for a while, then decided it was better to fix up the place we have. So, that's what we're doing. We have a little over 10 years left on the mortgage. (Fortunately we have both the skills and the stamina to do a lot of work ourselves that most people can't do.)

Originally Posted by Angie682

I closed on my house in January of 2016. I intentionally put my offer in around the holidays because I knew there would be less competition. It worked. Good luck!

OP should travel back in time to 2009 and buy a house. J/K

[turf3]

If the mortgage company rejects a house loan based on appraisal, doesn't that imply that should they need to sell in case of a foreclosure, they do not predict being able to recover their costs, in other words, that the house is in fact not worth the sale price?

[TheOverdog]

do not predict being able to recover their costs, in other words, that the house is in fact not worth the sale price?

Yes, if you take the advice of an estimator to be infallible, which is questionable even at JiffyLube. But in any case, that's why they are talking about people paying above the max price that the bank will finance as determined by the appraisal to be paid in real cash, not loan, and unless you think you are going to immediately be foreclosed upon, then it's totally moot.

I guess they could totally admit that houses fall in value occasionally and sell 'gap insurance' the way car manufacturers do - doesn't seem to discourage people from buying cars.

[Persdawg]

Have an appraisal coming up on Monday...will be interesting to see how this game plays out.

[WorldKlas]

Originally Posted by Persdawg

Have an appraisal coming up on Monday...will be interesting to see how this game plays out.

Keep us updated!

[HP48G]

What's the average gap in today's hot market between contract and appraisal?
A relative bought a house in late 2014 and the difference was 1.6% of contract price and it was considered within tolerance.