A low appraisal can quickly cause headaches in a real estate deal. Especially where both buyer and seller feel the agreed upon price is fair and at market value.
The Washington Post highlights this issue today.
Growing numbers of mortgage loan officers and realty agents say appraiser reluctance to report local appreciation is becoming a significant complication in sales transactions. In a new poll of its members, the National Association of Realtors found that 33 percent of them reported appraisal problems during the month of May. Moe Veissi, president of the association, said poor appraising “in markets that are no longer in decline is the single most important” valuation obstacle “to seeing a real recovery.” Full article at the Post.
Phoenix metro is certainly a market where price appreciation has occurred and is occurring. Just look at the latest median price chart for Scottsdale below.
An appraiser relying on comparable sales from July last year is missing quite a bit of market appreciation.
Making An Appraisal Go Smoothly
Be Prepared. For home sellers one way to avoid headaches is to have your home in great condition before it even goes to market. Small details count. Once an offer comes in you might not have time to fix smal things before the appraiser visits and you would be surprised how small things can impact how the appraisers values the home.
Pull The Comps. Do not rely on the appraiser to pull all their own comparables. Your agent should pull all the relevant comparables and have a case ready why other homes are not in fact comparable. Your agent can hand the appraiser the relevant comps and also pass on information about the area.
Market Stats. If the market is moving up generally make sure your agent knows the numbers and can communicate that effectively.
Itemize Upgrades. If you have a Sub Zero fridge and a Thermidor dishwasher this is all relevant to your homes value. However, don’t forget the unsexy stuff too, water heater replaced in 2011? Make sure to let the appraiser know.
Appraisals shouldn’t be too scary if the homes is fairly priced but these few tips should help prevent an artificially low.