I was sitting in a staff meeting this week when Realtors began discussing their dismay over low appraisals. More often than not a low appraisal will kill a deal. Several Realtors related stories about how to fight a low appraisal. Appraisals are based on the recent sale prices of comparable properties. As the market changes and homes prices rise, some appraisers can be slow to recognize the change.
My thought, as I listened to the discussion, was that with the cooperation of the seller and the expertise of the Realtor, an appraisal can be done right the first time. Here are my suggestions.
The seller/buyer has a right to ask the bank about the experience and expertise of the appraiser before they come out for the appraisal visit. It’s important to have an appraiser who lives within 10 miles of your home, who knows local market conditions and is properly licensed/certified with the state.
Now here is where the expertise of a good Realtor can make a big difference. BEFORE an appraiser comes out to the house I can find good comparable sales for you. Federal rules allow sellers to provide the appraiser with their own comparable sales. We can have the ‘comparables’ setting out where the appraiser can easily find them.
If the seller knows of low priced comparable house sales in their neighborhood and can explain the reason why the homes sold at a lower price, the explanation can be helpful to an appraiser. The seller may know which homes sold less because of a divorce or financial distress leading to a short sale or foreclosure. If the seller knows that some homes have sold because the house or area is so desirable that they received multiple offers, then this is worth noting. This is important information for an appraiser. All these facts are something else the seller should put in writing and place by the comparable sales.
Finally, the seller, in a letter to the appraiser, needs to list all the value-enhancing improvements made to the property, the costs and the date the work was completed. This is especially important when talking about systems that are not readily apparent. This includes, new HVAC, new roof, new cement work, new electrical and new plumbing. List everything done to improve the home since it was originally purchased. The list can include new landscaping, interior and exterior paint, installation of flooring, appliances, fixtures, etc.
As always, the best thing you can do is to remove all clutter and have everything tidy and neat inside and out when the appraiser comes. If they are greeted by a home and yard that is fresh, clean and looking in good repair then they will have a good impression with which to do their work. You may talk to the appraiser and answer questions they may have. They should take the time to answer your questions as well. Then, give the appraiser some space. Don’t follow them around unless they ask you to do so. They will stop and talk to you before they leave. Do show them your comparable sales, documentation and list of improvements. Tell the appraiser they are copies to take with them.
If everything is done as outlined I’ve rarely had to deal with a “low” appraisal. So when you’re ready to buy or sell please text or call me at 402-670-8775 or email me at Marie.Otis@cbshome.com.