Although the battle might be fought over the value of a home, it seems that the seller is the one on the field right now that is loosing ground. Some homes are certainly starting to see bidding wars right now, and yet unfortunately even with this interest there are still homes that are being sold under the price listed.
When these bids go out to the seller the highest offer is being overruled by the lower appraisal. Based on recent reports the homes that sold in April were bought with as few as three offers. One of the contributing factors to this is the fact that from March to April home prices fell slightly.
Falling prices nationwide
Nothing was safe from the declining numbers. There was a 1.5% decrease in the average price of distressed properties from March and Short Sales fell 1.7%. Damaged REOs also declined by 0.3%, and the large share of properties that are distressed continued to pull prices even further down.
Based on the statistics given by HousingPulse there was a drop in the ratio of list prices compared to sale prices in April with some selling at a shocking 95% of the actual list price. Unfortunately this is something that is not new and has been taking place time and again over the course of the past two years.
Using a moving average of three months the distressed properties in April was at 47.9%, which is the 26th month in a row that this number has been 40 % or higher. On the other side of the coin, on average the amount of offers that are being seen for non-distressed homes in April was at 1.9. Right now there are more offers going to distressed homes, based on a national sample, and Damaged REOs are seeing as many as 3.5. Next in line are REOs that are move-in ready with 3.1 offers and short sales have been seeing about 3 offers per sale.
Offers often exceed appraisal value
The trouble with bids that do actually come in above the list price, is that the appraisals are preventing these transactions from being able to close. Although the HousePulse survey indicates that there are plenty of bidding wars coming in for properties that are desirable, the appraisals are forcing the transaction price down. When a buyer sees that a property has value and is willing to pay for it, the seller is forced to still let it go for much less.