HOT MARKET: Will The Property Appraise?

It’s no secret that the local real estate market is hot hot hot. With record low interest rates, buyers are out in full force. However, because of extremely low housing inventory, there’s nothing for them to buy leaving massive competition for the properties that do come on the market. We’re seeing buyers submitting AGGRESSIVE offers with little to no contingencies and going well above list price. 

In an equal buyer/seller market, inventory levels sit around a six month supply. Meaning if we stopped listing homes and buyers kept buying at the same rate, in six months there would be no listings for sale on the market. In all of 2019, the Arlington market never saw inventory above a 1.5 month supply. As of March 1st, we’re currently sitting at just over a one month supply of homes for sale tilting us in a heavy sellers’ market. This is part of what’s feeding the mad rush for homes and the AGGRESSIVE offer terms. In the last six months of 2019, Arlington properties sold in a median of 8 days on market. Neighboring Fairfax County properties sold in a median of just 15 days on market. We’re essentially back to 2004 pre-recession real estate bubble numbers as far as how quickly properties are moving. 

This intense competition is leading to bidding war after bidding war with as many as 5,10, or 20 plus offers on properties in just a few days. The question is, are these properties appraising for the escalated contract sales price? The answer is that in many cases there is no way that the property can appraise for the contract sales price in today’s market. At this point there just aren’t comparable sales to support the prices that properties are selling at. Still, buyers are submitting offers that are non-contingent on appraisal. What does that mean?

If your offer is contingent on appraisal: In order to retain financing on the property from your lender, the property needs to appraise at or above the contract sales price. If the property doesn’t appraise at or above the contract sales price you can still get financing but one of four things has to happen.

  1. The seller has to reduce the contract sales price to the appraised value.
  2. The buyer has to come out of pocket for the difference between the contract sales price and the appraised value.
  3. The seller and buyer meet in the middle to make up the difference between the contract sales price and the appraised value.
  4. The buyer voids the contract and generally retains their earnest money deposit.

In this market, many buyers are submitting offers that are non-contingent on appraisal. This means that they need to make up the difference of the contract sales price and the appraised value. Here is an example: Contract Sales Price: $700,000 – Appraisal Value: $650,000 = Buyer needs to come out of pocket the $50,000 difference on top of their down payment and closing costs. 

However, that may change in the coming months. Interest rates remain at record lows and I don’t foresee an inventory spike any time soon. I expect prices to remain high but we’ll have sales that have closed in February, March, and April to use as comparable sales to justify the high prices. By June, appraisal values “may” be one less thing that buyers will need to be concerned with. 

Pro Tip: If you’ve even considered selling, contact your trusted real estate professional and see what a buyer might be willing to pay for your property in this market. If you haven’t considered selling, contact your trusted mortgage professional to see what refinancing might look like for you. 

Stay tuned for Coming Soon articles that may answer some questions that this post may have sparked: 

  • Best time to Sell
  • How long does it take to close on a home?
  • Does staging make a difference?
  • Relationship between home price and days on market
  • Does a higher down payment help with negotiations?
  • What are Closing Costs and who pays them?

If you have specific questions or would like to set up an in-person meeting to discuss your scenario, please call or email me directly at (703) 915-2244 / [email protected]. If you enjoyed this post and would like access to more of my articles/videos, visit the video/blog section of my website at:


Jason Curry

Licensed Realtor: VA & DC

J Curry Group at KW Metro Center

2101 Wilson Blvd #100

Arlington, VA 22201


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About the Author

Jason Curry, founding owner of the J Curry Group, based in Arlington, VA, has a long record of successfully guiding his clients through the home buying and selling process. He epitomizes integrity, energy, hard work, and creative service in every detail of your residential real estate transaction and he has represented sellers, buyers, and investors. Jason is annually a top producer in the area and is respected among clients and colleagues. Jason specializes in applying his expertise and market knowledge to residential properties that consistently exceed the personal and investment goals of his clients. He recognizes the importance of customer service in the real estate industry, and has developed systems and processes to ensure pleased and profitable clients. Grateful for an amazing group of neighborhood friends and contacts, Jason makes sure that new residents are welcomed in a way that has become customary in the Northern Virginia area. Jason is a lifelong resident of the DMV and is a proud alum of George Mason University where he earned his Bachelors degree.