Several real estate appraisers have mentioned that foreclosures and short sales have created a new price structure that includes average home sales prices and distress sales. This means that homes may have been appraised at a lower value because the “comps” in the area are low as well. So what should a homeowner do if the valuation is too low?
Appraise First, Set the Sales Price Second
- Get an appraisal before you list the home for sale, this way you can take steps to raise the value if the price falls short of your expectations.
Get a Copy of the Appraisal
- Get a copy of the appraisal to examine whether or not the details are all accurate.
- Carefully look over the report to make sure the appraiser reported your home correctly in terms of beds, baths, measure the livable sqft of your home correctly.
- Read the entire report and examine what comparables were used. Are all of the comparables (or some of them) smaller than yours in terms of livable area, site size or room count?
- Check to see if the closed sales in the report have closed within the past three months and are located within a mile of your home and within your neighborhood boundaries.
- See if the appraiser crossed any major highways, train tracks or neighborhood boundaries to use comps that are located within inferior neighborhoods
- Another thing to look for is the location of the appraiser. Was it done by an outsider who is unfamiliar with the neighborhood? If your appraiser is unfamiliar with the area, you may have gotten the wrong value assigned to your home.
Review the Comps Again
- Search yourself or ask your Realtor to provide more recently closed sales, located within closer proximity which are more comparable than the ones the appraiser used and ask your appraiser why they did not use that sale or those sales.
- If the appraiser used short sales or foreclosure sales ask if there were arms length sales available and why the appraiser did not use those.
- Find out which property sale the appraiser gave the greatest emphasis to. For example, if one of the comps the appraiser used is located within your subdivision or condo and it sold for the highest price, and the other comps are located outside the subdivision or condo and sold for a lower price, did the appraiser give greatest emphasis to the sale inside the subdivision or condo when arriving at the estimated value?
Get Another Opinion
- A second appraiser may back up your arguments, such as a revision to include more accurate details or more closely related comps.
Negotiate a New Deal
- A buyer may consider renegotiating if the value of a home is lower than they originally expected. A seller could then renegotiate their sales price with the buyer. This only works if a homeowner is willing to accept a lower price.
Low appraisals can be hurt the deal, however, it is worth it to try and work around the situation in order to get good sales figures. If you find yourself facing a lower appraisal than the sale price in the contract, take immediate action.Tags: appraisal, appraisal questions, appraisal questions answered, appraisal sale, buy a home, does your appraiser, home sale, home value, low appraisal, property appraisal, what is an appraisal, what is appraisal
This post was written by Joseph Castaneda