Residential estate can create some UNreal events that can create UNexpected results.
Two months ago in November of 2012, a home in Emerald Hills of Redwood City was under contract to a buyer for the price of $700,000. UNfortunately for this buyer, the appraised value came in at the UNbelievably low value of $650,000. This was $50,000 less than the purchase contract price and despite the best efforts to provide the appraiser with valuable comparable information that would support the contract price, the appraised value remained the same. The buyer lost the property.
The property was placed back on the market just after Thanksgiving in the middle of the holidays. In an UNcanny turn of events, the number of buyers had increased tremendously in just the last 2 months of 2012 and after one week on the market, 8 offers were received on the property. It just closed escrow today for the price of $770,000. This was a $120,000 turn around for the seller!
How is it possible for an appraisal to be this far off the market value for the property in just 2 months?
So how is it possible for an appraisal to be this far off the market value for the property in just 2 months? Appraised value is mostly a look back at the price for which recent comparable sales have closed. In an UNtimely way, though, these are sales that occurred 30 to 60 days before the actual closing, This in turn reflects the market from 2 to 6 months prior to that when the property was first placed on the market.
In a year like 2012 which saw a big turn around in value in the San Mateo County and Santa Clara County residential markets, the market value continuously outpaced the appraised value all year long.
The results for this one seller was, thankfully, UNreal!