Appraisals and Today's Real Estate Market
By Keith Loria
Unfortunately, in today’s topsy-turvy real estate market, deals falling apart due to the appraisal coming in lower than expected are often a common occurrence. However, it’s important for buyers and sellers to understand that there are things they can do to protect themselves from this type of situation.
One of the most important things to keep in mind is that it never hurts to get an appraisal done before you list your home so there are no surprises along the way. This also gives you the chance to improve certain areas—or aspects—of the home if the appraisal comes in lower than you’d like. Plus, it allows you to set a realistic price for your home and will give you better negotiating power.
When it comes to choosing an appraiser, it’s a good idea to pick one who comes from your county—or at least one who is close by. Local appraisers will typically understand the value of the neighborhood better and have a grasp on what the market is like. Plus, because they live in the area, they may place more value on certain things and will want to keep the value of the neighborhood high.
Some appraisers compile data strictly out of the MLS and don’t take into consideration some other factors that might have skewed the numbers. Therefore, it’s important to have your REALTOR® point out any short sales or foreclosures that may have affected the comps in recent months.
You should also ask your REALTOR® to find an appraiser with a residential appraiser certification and a professional designation. While most appraisers typically fall into this category, if yours doesn’t, it might come back to hurt you because the appraiser may not be up-to-date on the latest developments.
If you take advantage of a pre-listing appraisal, there’s nothing stopping you from giving it to the buyer’s appraiser so that they have more information to go by when it comes to making an offer. This practice may even work in your favor by speeding up the process.
If you’ve explored all the above options and the appraisal still comes in lower than expected—maybe even enough to kill a deal—don’t be afraid to question the appraisal as the appraiser may have overlooked something. If you do challenge your appraisal, in some cases, banks will either use appraisal management companies that hire out-of-area appraisers or low-cost appraisal products like automated appraisals instead of a full professional exterior and interior appraisal.
Don’t let a low appraisal destroy your dream of buying or selling a home. Taking a few simple steps into consideration, you can ensure that your price is right and that your appraisal will come in on target.
Contact our office today to learn more about appraisals.