Friday, July 19, 2013

Why Did My Home Appraise for Less Than What I Agreed to Sell It For?

When it comes to selling a home and avoiding problems with appraisals, it takes a skilled real estate agent who understands the appraisal process to avoid issues that could potentially kill your deal! If that happens you may be asking yourself, “why did my home appraise for less than what I agreed to sell it for?”

house-prices-up

Since January of 2013 property values in the Long Beach and Lakewood areas have increased over 10%. That means that the home that was worth $400K last summer is now worth $440K. The problem starts with the fact that we have limited inventory on properties that are priced well and many times that $440K home may sell for $450K. As a Listing agent, my job is to make sure and provide the assigned appraiser with three GOOD comparable sale for them to use in their valuation process.

This marks the difference between a good agent and a “not-so-good agent”! A good agent will meet the appraiser at the property and come prepared with comparables. I always go through the improvements of the property with the appraiser to ensure they are aware of all the features of our subject property.

WHAT IS A COMPARABLE SALE?

Must be within the same city, within customary neighborhood boundaries, preferably within ¼ mile of the subject property but no more than ½ mile and within the past four month. They size also need to be a like-type property and within 150 Square feet of our listing; for example if our home is 1200 sq. ft. then we would use homes between 1050 and 1350 sq. feet.

WHAT ABOUT ACTIVES AND PENDINGS?

Appraisers will look at these but they do give them much weight to the value. The sold properties are the only thing that can be realistically considered a true comparable. My job is to inform the appraiser why your home is worth the price we accepted an offer for and how the home differs from the properties that may have sold for a lesser amount.

SO WHAT HAPPENS IF WE STILL DON’T APPRAISE FOR THE SOLD PRICE?

In a rising value market such as the one we are currently experiencing (Spring/Summer of 2013) my strategy is and always will be to do everything I can to prevent an under-value issue but we don’t have to accept that under-value appraised value.

WE HAVE THREE CHOICES TO MAKE

1. Reduce the price to match the lower appraised value.

2. Ask the buyer if they are willing to pay more and/or perhaps meet them half way.

3. Rebut the appraisal and determine why the appraiser did not consider the comps that we felt were a good representation of our subject property’s value.

In conclusion … when hiring an agent to sell your home, make sure they understand this appraisal process and are experienced in the successful resolution to problems should they occur.

If you would like more information about this subject … just give me a call 562-882-1581 or visit www.SuperBroker.com