Inflation and rapidly rising interest rates have cooled off the real estate market. Supply and demand has shifted. You’ve probably noticed more “for sale” signs in your neighbourhood. I know I have. That means the inventory of homes for sale is less of a concern right now. Great news, right? But that shift may cause another problem.
Rewind: for 2+ years during the pandemic-induced frenzy for real estate, most appraisals came back matching the purchase price (or higher). Fast forward to today: some homes are being valued for less than their agreed purchase price. Now what?
What Does a Lower Than Expected Appraised Value Mean?
- There is the possibility a low valuation has revealed issues such as the economic/useful life of the property, the discovery of mold, or structural problems. These factors will be a concern for your mortgage lender.
- If you presented an offer to purchase with no conditions of financing it means you are obligated to complete the purchase at the agreed upon price. Your mortgage lender may still offer you a mortgage – but perhaps not as much as you hoped. Here’s an example:
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- You’ve presented an offer to purchase (without conditions) for $1,500,000
- You’ve agreed to a 20% downpayment or $300,000
- The property has been appraised at $1,400,000
- Your mortgage lender has offered 80% of the appraised value or $1,120,000
- You’ll have to find an additional $80,000 to honour the purchase price of $1,500,000
The Bottom Line
The economic landscape is changing and it’s happening quickly. The moment you decide to jump into the real estate market, make sure you have a Mortgage Broker, like me, by your side. As independent professionals, mortgage brokers represent you, the client, not the lending institution. This provides you with the best advice for your mortgage needs. Bar none. Let’s talk!
Cycling the Trails on Mother’s Day
Fresh air and exercise help clear your lungs, lower your blood pressure, give you more energy and better mental focus!
Add to all those benefits fabulous weather and good friends and you’ve got the perfect Mother’s Day 2022.
Here’s me and my besties out for a ride on the beautiful Brantford Rail Trail.
Save the Date: Sunday, September 25
Running For Rachael – 10 Years of Building Hope!
Running for Rachael plays a vital role in supporting the city-wide work of suicide prevention in Hamilton by bringing the community together to promote hope, help and healing through crisis support information, training, education and support groups.
Running For Rachael is a community 5K Run/Walk taking place on Sunday, September 25, 2022 at CF Lime Ridge.
Early Bird Offer (available until June 15, 2022):
Friends and Family: $40
Individuals: $20
Your registration includes (a) a 10-year anniversary medal (b) a swag bag filled with great offers from CF Lime Ridge retail stores and local businesses, and (c) tons of FUN!
Hey – thanks for following me. You’re appreciated!
