In Dade County-Miami, most of the purchasers are paying cash. This can be a disadvantage for purchasers who need a mortgage to assist them in obtaining the property. Property values are increasing monthly in my market, and many appraisals come in lower than the contract sales price because of the rapidly increasing property values.
Home buyers who are obtaining mortgages need to be prepared to cover their down payment, and the difference between the appraised value and the sales price. As an example, a contract sales price is $500,000, yet the appraisal comes in at $475,000. If you assume the seller will not lower the price, then the purchaser may go forward by paying $25,000 plus the down payment. ($500,000-$475,000=$25,000).
A prudent buyer in the market who needs to obtain a mortgage should hold some funds in reserve so that they may continue forward with the transaction should this occure. With multiple offers on available property, limited inventory, and 80% of the offers cash, it's not unusual to run into this.
Does it mean you are over paying for a property if it does not appraise? Not always. Your REALTOR can help you determine the answer to this question. As a purchaser, you have a great idea of what housing values are doing based on the inventory you looked at prior to making a decision to purchase. Most purchasers today are looking at real estate as a long term investment (3-5 years), not trying to resale in six months at a profit.