Prices are on the rise in our Sacramento housing market but we are finding the appraisers for loans are having a hard time catching up with the sudden increases. As a result we are seeing more listing where sellers are insisting home buyers waive their appraisal contingency. Because of the shortage of listings, buyers are agreeing to this condition, which means if the property valuation is less than the contract price, the buyer has to pay the difference in cash at closing.
As much as I understand the reasons to waive the appraisal contingency I have concerns. A buyer with no appraisal contingency is increasing the risk of paying more for a home than it is worth. Although I don’t see any reason to believe prices will decrease much, if they do, a buyer may find themselves in a bad position and blame their Realtor.
With the demand so much greater than supply, the competition for homes is high and waiving contingencies is becoming a common practice to enhance the buyer’s offer but as Realtors, it is our responsibility to make sure our clients know what they are doing.
Although we are starting to see a few more listings come on the market the demand remains high and if you or someone you know is considering selling, now may be a good time put your home on the market and take advantage of the current seller’s market.