I hope this note finds you doing well! I’m sure you’ve noticed that the market is still HOT. If you have sold this year or have had a friend or neighbor that has sold this year chances are you have heard stories about appraisals coming in under the sale price. Luckily, this doesn’t happen every time but with the appreciation in the first part of the year appraisers had no historical comps to turn to and therefore were pushing out low appraisals at an accelerated pace. Now that some of the sales from earlier this year have closed, appraisers have more to go on and therefore the low appraisal epidemic has seemed to be alleviated at least somewhat. Briefly, I’ll give you a simplistic difference between an appraisal and a home evaluation. An appraisal is done by an appraiser and a home evaluation or CMA (comparative market analysis) is done by a Realtor. A home evaluation predicts what a home will sell for and an appraisal confirms it. A Realtor doing a home evaluation needs to use not only historical data which is the sold comps but also market trends. What is the absorption rate in the price range and neighborhood, and what is the pending ratio? Where is the market headed and what is it doing currently. Only relying on sold comps will leave you undervalued in a rising market and overvalued in a slowing market. So, if you find yourself fighting a low appraisal… here are 3 things you can do to not just give in to the low valuation.
See if the buyer will make up the difference in cash between the low appraisal and the sale price.
If allowed by the lender… get a second appraisal with the same lender. Forget trying to appeal the first appraisal. Most appraisers aren’t gong to modify their appraisal therefore admitting fault or error. In my opinion it is a waste of time.
Request that the buyer gets a different lender. Sometimes, a fresh start makes a world of difference. I have had the most success with this option and option number 1.
I hope you don’t run into an appraisal problem. But if you do this should help. It also doesn’t hurt if your Realtor