You’re ready to sell you home; you cleaned it, removed the clutter, boosted your
curb appeal and worked up a reasonable asking price. All that’s left is waiting on the appraisal, only to find that your home’s value is lower than expected. The prospect of a low appraisal is one of the fears for many sellers. However, you don’t have to throw in the towel. Let’s discuss a few things you can do if you receive a lower than expected appraisal.
REASONS FOR A LOW APPRAISAL
There are a number of reasons why this happens. To better understand the why and how, let’s divide them into three categories, condition of your house to the comparables, market conditions, appraisers and comparables.
CONDITION of YOUR HOUSE
Often, sellers over-value their house, because they have sentimental value to them. Even when a seller has completed some updates, they may not be to the level of the higher priced comparables. It helps if you know what features, and updates the comparables present. A professional can help you with this information. Knowing how your house compares to the competition, will help you set realistic expectations.
- Hot markets
In an active and competitive market, the homes may be selling quickly, and appraisals could be lagging behind market prices. A good comparable, could be pending at your price point, but because it has not closed yet, the sales price is not available to the appraiser.
- Cold markets
In a slow market, the effect could be that there are not enough sold comparable homes to support your price. If homes in your area, with identical quality and features sold a long time ago, the lack of any recent comps acting as a point of comparison would make it harder to come up with the current market value of your property.
- Lack of local market knowledge
It’s common for appraisers to be licensed in more than one county or location. The problem here is that some appraisers may not be aware of the unique characteristics of each neighborhood. Another challenge is when the appraiser is generally new to the profession or hasn’t performed enough appraisals to give them the needed experience and expertise on a specific type of real estate.
Homeowners that are motivated only by the desire to get rid of their property quickly, for whatever reason, will most likely give in to low offers from buyers. This can negatively affect you, because these lower sales prices can lower the comparable home prices, in your area. If there are several of these lower priced sold homes, the appraiser will most likely be affected in determining your house’s value.
In an area that only has two or three properties that have been foreclosed on, although unfortunate, can be easy to work around with. However, in an area lined with a number of foreclosures, you can expect a decline in almost every property’s value.
HOW DO I CHALLENGE A LOW APPRAISAL
You can try to contact the appraiser, but they are not under any obligation to listen to your plea, or to review additional comps. Here are a few things you can do to help your cause:
Do your own research / Rebuttal
Request a copy of the appraisal form and look for any red flags. Since you’re the homeowner, there’s a chance that the appraiser overlooked something in your home that only you are familiar with. They may have written down wrong values or miscalculated the square footage. Ask for a second opinion and give the report a thorough review. If possible, you may want to wait for pending sales to close, so the appraiser has better comparatives to support your home’s value.
Conduct a comparative market analysis
An appraiser determines the value of a property by comparing homes in the area. If you find out that they conducted a market analysis that includes properties outside your neighborhood, this would affect, and even lead to a low appraisal of your property. Try to use comps that are closer to your property than those that were used by the appraiser.
Request for a second appraisal
With a strong argument at hand, try to ask for another appraisal. Appraisals are ordered by the lender, If you can make a convincing argument, the lender may go ahead and have another appraiser appraise your home. You may have to pay for the second appraisal, but it could be worth it, if the value comes back higher.
Work with real estate professionals
A low appraisal is only one item that can go wrong when selling your house. You need a team of experts to provide guidance on how to overcome a low appraisal, and any other obstacles that stand between you and the sale of your home. Here at SellUsHomes, we know the Detroit real estate market like a puzzle we solved hundreds of times. You can be informed, and assisted throughout the sale of your home. Don’t entrust the sale of your home to just someone. Work with proven professionals. To learn more, contact us at (734) 224-5947 or send us an email at firstname.lastname@example.org.