The Arizona real estate market is flooded with multiple offers these days due to low housing inventory levels. Multiple offers usually mean that sellers are getting top dollar for their homes. This is a great situation up until the appraisal comes back lower than the contract price.
Since more and more agents are finding themselves in this situation, here is a way to plan ahead and use those multiple offers to your advantage.
First, start using an Appraiser Information Packet if you are not already. There is a section in the packet where you can make the appraiser aware of the multiple offers on the property. This gives the appraiser even more information about the house and the state of the neighborhood.
You want the appraiser to see that the contract price is a realistic value for the property. It can help your case if the appraiser sees that there are other people willing to pay a certain price for the home.
Second, include copies of the contracts in the information packet. This way the appraiser does not just have to take your word for it, you are actually providing evidence to support your cause.
It is the appraiser’s job to determine the most probable price for a property, which is not always the highest price offered. By providing evidence of multiple offers in the highest price range, it can help bump up the range in which the most probable price will land.
In low inventory markets, a contract may come in high only because the buyer is trying to guarantee that they will get the property over the competition. This does not mean the market supports that high of a price on that particular house.
This is when appraisers will start to dig deeper into inventory levels, multiple offers, and days on the market to determine probable value. The appraiser will use this information in addition to looking up at least the last three closed sales in order to determine a range of value. Low inventory, multiple offers, and low days on the market can all bump the range of value up to higher levels.
This is why it is so important to do your homework and make sure that the listing price is supported by all of these factors before ordering an appraisal. If you can make the appraiser aware of all of this information, then you have increased your chances of a successful sale.