{"id":282,"date":"2011-09-01T23:44:00","date_gmt":"2011-09-02T03:44:00","guid":{"rendered":"http:\/\/dankrell.com\/blog\/?p=282"},"modified":"2019-08-01T06:47:09","modified_gmt":"2019-08-01T10:47:09","slug":"coping-with-a-low-appraisal","status":"publish","type":"post","link":"https:\/\/dankrell.com\/blog\/2011\/09\/01\/coping-with-a-low-appraisal\/","title":{"rendered":"Coping with a low appraisal"},"content":{"rendered":"\n
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I know it\u2019s trite to say that selling your home in today\u2019s economic environment is challenging. You know that home buyers are very picky and money is tight. However, are you (or your real estate agent) prepared for a low appraisal?<\/p>\n\n\n\n

According to the Appraisal Institute (appraisalinstitute.org), an appraisal is \u201ca professional appraiser’s opinion of value.\u201d The appraiser\u2019s role is to \u201cprovide objective, impartial, and unbiased opinions about the value of real property\u201d\u2026 \u201cAppraisers assemble a series of facts, statistics, and other information regarding specific properties, analyze this data, and develop opinions of value.\u201d<\/p>\n\n\n\n

Although there is a standardized procedure in conducting and preparing an appraisal, lenders add their own criteria to meet their underwriting requirements. There is no doubt that many lenders have made their criteria more restrictive since the housing market downturn.<\/p>\n\n\n\n

Contrary to the current attitudes, low appraisals have always been around. It was not until the market downturn when many home sellers were confronted with concrete evidence of their home\u2019s depreciation. However, the issues with today\u2019s low appraisals are slightly different those of years past. In addition to stricter lender requirements and increased appraisal scrutiny, some have argued that changes to the appraisal industry (including management and ordering) may have also contributed to low appraisals.<\/p>\n\n\n\n

Although not as pervasive as they were several years ago, low appraisals are still common. If your home does appraise lower than the contract price, you can appeal the value with the lender \u2013 but it will be difficult. In the past, appraisal appeals were less demanding (typical comparables were homes that sold within 6 months and 1 to 5 miles from your home) providing you a higher chance of success. However, today\u2019s lender requirements are more restrictive. Although lenders vary on their requirements, many lenders now only accept appeals that include three original comparables that sold within the last 3 months and are within \u00bd mile (or less) of your home.<\/p>\n\n\n\n

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Don\u2019t wait for a low appraisal to throw a wrench in your sale; take a proactive approach. Long gone are the days of setting a price by tacking on thousands to your neighbor\u2019s recent sale price! Pricing your home correctly doesn\u2019t only help attract home buyers, but it can also help avoid a low appraisal. Furthermore, choosing appropriate comparables for your pricing strategy is highly important, which include: comparables that are most similar to your home (same style and within 15% to 20% of living area and lot size); the most recent sales (within 3 months, but nor more than 6 months); and in close proximity to your home (unless you are in a rural are the comparable should be within \u00bd mile, but no more than 1 mile).<\/p>\n\n\n\n

Additionally, the appraiser should be provided with your pricing rationale (i.e., the comparables that indicate that your sale price is in line with the market as well as a list of improvements that add value to your home). The intent is not to pester the appraiser while they are trying to do their job. However, some appraisers are appreciative that you have made the effort to provide the information (especially those who are unfamiliar with the local market).<\/p>\n\n\n\n

Regardless of the outcome of your home\u2019s appraisal, take heart that you can be proactive to possibly avoid appraisal issues. And if need be, don\u2019t be afraid to appeal a low appraisal.<\/p>\n\n\n\n

\nby Dan Krell
\u00a9 2011\n\n<\/p>\n\n\n\n

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. <\/p>\n","protected":false},"excerpt":{"rendered":"

I know it\u2019s trite to say that selling your home in today\u2019s economic environment is challenging. You know that home buyers are very picky and money is tight. However, are you (or your real estate agent) prepared for a low appraisal? According to the Appraisal Institute (appraisalinstitute.org), an appraisal is \u201ca professional appraiser’s opinion of … <\/p>\n

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