Stricter Appraisals for Saratoga Real Estate

Hoping to mitigate losses, many lenders are now requiring more thorough home appraisals and reviewing valuation figures more carefully than in previous years.  Lenders now often require “comps” (sales of comparable properties used to help determine a home’s value) that are no more than 60 to 90 days old, and within one mile of the property being appraised. 

Some appraisers also determine the value of a property based on the neighborhood’s “absorption rate” – the amount of time it will take to sell that market’s entire housing inventory at the current sales pace. 

Here’s the current absorption rate by price range for single family homes in Saratoga: 

 

What does this mean for you as a buyer or seller? 

• If an appraisal does not include enough data to support the appraised value, some banks are reducing the loan amount for the property and, in some cases, rejecting the loan altogether, forcing some home buyers and sellers to renegotiate the sales price.
• It is important to use a local Realtor since the real estate market varies greatly among neighborhoods and cities.  If the appraiser is not familiar with the dynamics of the local market they might “kill the deal” without the assistance of a local Realtor to fill in the knowledge gap.
• Absorption rates are price sensitive, which in Saratoga, California means that homes priced above $2.5 million are in greater supply than the market can absorb quickly.

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