As the real estate market continues to grow, more home buyers and sellers are coming across a common issue: An appraisal that is too low! After all, valuations must be based on recent comparable sales, or “comps,” and in some cases the rising rate of home sales does not match the rates of homes sold previously. In this article, I’ll cover what to do if you get a low appraisal.
But first, you need to ask why? Why is the appraisal lower than your expectations? This may have occured because as home rates continue to recover from the housing crisis of the recent past, those comps might be lower in price than a sale that occurred just three months prior.
This is more common than one would think.
“Whenever you have an increasing market, and in certain pockets we have that now, appraisers’ hands may be stuck,” said Traci Levine, a realty agent with Long & Foster in Bethesda to the Washington Post. “They go by past history and not future sales.”
Whether you’re a buyer or seller, it’s important for you to understand the steps you can take if you receive a low appraisal.
No worries home sellers, we’ve got your covered. If you recently got a low appraisal, here’s what you can do to determine what the real valuation of your home is.
Step 1: Call your lender (If refinancing or buying with financing) and request a “reconsideration of value form” (most lenders have a standardized form). On this form you will be asked for addresses to other homes or condominiums in your neighborhood that the appraiser did not use in their report which you feel are more recent, more comparable and sold for higher prices.
Step 2: Submit this form to your lender and they will forward to the appraiser. The appraiser will either need to include these sales in the original appraisal which could increase his/her original appraised value, or write a response as to why he/she feels that they are not more comparable and will not include them in the report.
Step 3: If step 2 does not work you can speak with a local Realtor and see if there are some Pending Sales which are getting ready to close any day now. Once any of these sales close, the appraiser can use it as a comparable that can help to increase the value of your appraisal. Keep in mind that if these sales close after the effective date of the original appraisal, the appraiser will have to come out again and inspect the subject property in order to update the appraisal with the new closed sale.
There you have it. Good luck selling or buying your home, and let us know if you’ve ever received an appraisal that was too low and what you did about it! Please leave any questions you might have about this topic below and we will be glad to answer them.Tags: 2013 real estate, appraisal, appraisal questions, appraisal questions answered, appraisal sale, appraiser questions, buy a home, comps, does your appraiser, home appraisal, home appraiser, home sale price, home valuation, improve appraisal, low appraisal, low sale price home, property appraisal, real estate, tips to improve home price, too low home appraisal, what is an appraisal, what is appraisal
This post was written by Joseph Castaneda