One of the things many agents in my office (including myself) are seeing is appraisals that are coming in lower than the sales price on the contract. A good listing agent will do everything they can to provide the appraiser-before the fact-with comparable sales that support the sales price on the contract; however, many times there is only so much they can do. Sometimes comparable homes sold longer than 6 months ago and appraisers will not consider sales that are too old. In my own recent experience, the comparable homes sold during November and December when prices were somewhat surpressed because there were fewer buyers in the market over the holiday season. Ultimately, appraisers work for the lender and must give what they believe to be an accurate and reasonable market value to the home.

What are the options for the buyers? The buyer can walk away from the property--Section 4A of the One to Four Residential Contract which indicates that the buyer may terminate and receive back their earnest money. If they have the cash, the buyer can add money to the transaction so that the loan-to-market value (established by the appraisal) remains at the level on which the lender is willing to lend. Even if the buyer has the cash to make this larger investment, it is important to make sure that the value of the home is worth the additional investment. Unlike other parts of the country, historically the housing market in San Antonio has not fluctuate wildly. However, it can drop below the current averages. Caution is advisable when considering the investment of additional cash.