What Can Be Done About 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.

Appraisers work by comparing three or more similar properties in that area that sold recently (comps) to determine the value of your home. Taking into consideration things like age of the house, its size, location and condition. Also taken in to consideration the type of sale - meaning if a comp was a foreclosed or otherwise distressed property that would lower the sales price.

Back before the housing bubble burst it was thought pressure was applied to appraisers to "hit the number". Or come up with an appraisal that justified the selling price and made the deal work. As a result the rules were changed and the appraisers are no longer selected by the broker or lending institution so as to avoid any undue influence on the valuation.

So one possible reason for the lowball appraisal is unfamiliarity with the neighborhood.

A stagnant housing market naturally means there are fewer recent sales to compare your home to, suitable matches or not.

Mistakes happen. Which would be the third reason for a low appraisal. In the rush to get the appraisal done, the person may miss something about your house or simply select the wrong comps.

So what can you do to avert such a crisis? Well it's up to you to insure your home isn't undervalued. Yes the appraisal is technically just one person's opinion of the value of your home. But it's one that carries a lot of weight. Problem is there's nothing in the process that guarantees the appraisal comes up with an accurate valuation. Here's some things you can do however.

For starters identify appropriate comps yourself. Then try to learn the story behind any that sold for a price lower than they should have. Things like divorce, deferred maintenance, or a short sale perhaps. Make the appraiser aware of these. At the least they may use these as a starting point.

Curb appeal can make a good impression when the appraiser visits. Maybe not a lot but every little bit helps. So treat this situation like an open house and have your house ready as if it were on display.

Don't be afraid to highlight the special selling points of your property. Be that landscaping, renovations made or upgrades like new windows or deck or patio. Give the list of these to the appraiser involved to insure they don't miss them. They're busy. Yours isn't the only house they are appraising. Any help will be appreciated.

Double check the facts in the final report. There's no problem asking to see the appraisers report to see if there are any mistakes like the square footage area of the house, size of the lot, number of bathrooms and so forth. If such mistakes are found a do over is in order.

In a distressed real estate market there are enough things working against completing the deal as it is. So it's smart to do all you can to insure that a low appraisal isn't one of them. The process of appraising property is somewhat subjective. So want to do all you can to insure the judgement made about the value of your house is as fair as it can be. - 30229

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