Home Listings

Appraising is an art, not a science.

Appraising is an art, not a science. Therefore, you can have five different appraisers do appraisals on your house and get five different values.  I am sure you can imagine how an appraisal can mess up the purchase process for both the buyer and seller.

What is an appraisal?images

Say you’ve found your dream home and the asking price is $300,000 — an amount you’ve already been pre-approved for by your lender. The question is, is the home really worth that amount? That is, really, left to the home appraiser to determine. The worth, or value of the property, will determine how much a lender is willing to give you to buy a particular piece of real estate.

This is often times a confusing part of the mortgage process in which both buyer and seller must depend on the expert opinion of a complete stranger. If your $300,000 dream home is appraised at only $200,000, then that is all your lender will value it at.

A home appraisal protects the bank from getting stuck with property that is worth less than what they have invested. And it protects you from paying too much for a house simply because it was love at first sight.

This may seem simple enough.  However, it is becoming more common to find that appraisals are coming in low and causing many problems for the buyer, as well as the owners trying to sell their home.  I wish I could tell you why this happens but all I can figure is that it comes down to who does the appraisal and how much they know about the area, how good their comps are and how hard they are willing to work to find the value.

Thankfully, there are a few things you may be able to do to help.  First, it is not a bad idea for you and your agent to be prepared with recent comparables within close proximity to your property.  Your agent should keep these on hand in case the appraiser can not find comparable properties themselves.  Second, your agent will want to attend the appraisal and make sure to point out all the upgrades. (Even if the appraiser seems disinterested in what he or she has to say, be sure they know what is updated in the home.) Next, be sure to get the appraiser’s business card so you have a direct contact if there are any problems.

Once your appraisal is back your lender will be given a green light to move forward with the loan or a red light because the value is not there.

If your appraisal comes in low, talk to your lender about it.  Have the lender submit for a review of the report.  If you still do not get the value you feel you deserve, hire a different appraiser to review the low appraisal. He or she should give reasons why the appraisal was too low. The new appraiser should also supply you with better comparables that the initial appraiser should have used, or let you know if the original appraiser made excessive adjustments which lowered your appraised value.

If your lender is not in support of this, consider going to a new lender and getting a new appraisal.

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