Real Estate: Little Known Solutions For Avoiding Low Appraisals

By Irish E Danner

In real estate markets where the inventory of unsold homes is escalating a common problem occurs. That is sometimes when a deal is struck it can be put at risk by a low appraisal. Meaning that unless the seller lowers their price or the buyer puts more down the sale can be scuttled. What can be done to avoid such a headache? Let's find out.

Basically appraisals are built from what comparable properties (comps) sold for. Various factors are taken into consideration. Facts about the house to the type of sale was recorded as these can all affect valuation.

Also the rules have changed and lenders and mortgage brokers can no longer select the appraiser. Because it was felt sometimes the appraiser was influenced to bring in whatever valuation was needed to put the deal together. Which may have produced inflated property values which lead to the real estate problems we are trying to work through.

So one reason an appraisal might now come in low is the appraiser doesn't know the neighborhood.

Another cause of low appraisals is that in a slow real estate market there are fewer comps to compare to which makes it hard to find suitable comps.

A third reason is simple human error. Something was overlooked that resulted in wrong comps being selected.

What can be done to avert such a mess? Do what you can to insure your property is properly valued. Even if an appraisal is technically an opinion it carries a lot of weight in this transaction. And there's very little to insure the valuation is 100% spot on. So you need to do what you can to make sure it is close.

First thing is to dig up comps yourself with the help of your real estate agent. After you find recent comparable sales in your area you want to learn if there were any unusual circumstances behind the sales such as a foreclosure, divorce, lots of deferred maintenance etc. Offer this info to the appraiser. Anything that will make their job easier is appreciated and will definitely help you get a more accurate appraisal.

Curb appeal can affect the numbers. Do the same type of prep for the appraiser as you would for an open house. You want the house to make a good first impression inside and out.

Highlight the selling points. Is there anything about your house that makes it stand out like special upgrades, renovations or recent remodeling? Provide the appraiser with a list of these. Pointing out the landscaping, little known benefits the neighborhood offers (schools) the yard filled with trees. Sometimes under the gun to get the appraisal done the appraiser may not notice all these.

Don't be afraid to ask to go over the final report looking for material facts in error. It happens. Square footage is wrong. Lot sizes are put down as smaller than they are. The number of bathrooms could be noted incorrectly. Any thing like this may affect the value and indicate another effort is called for.

You're wise if you anticipate problems like a low ball appraisal. That way you can be a step ahead of the problem so that it doesn't derail your sale. Those who follow the steps laid out will likely find themselves with an appraisal they can live with. Even if they are a somewhat subjective judgement call. - 30230

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