When I am listing a property, I want to find a list price that will bring in buyers and call them to action to write plus have a sale that will not face appraisal problems. It has been written about in newspapers and mentioned in TV reports, but the appraisal issue is very real when it comes to sales.
I tell my buyers they not only need to write an offer that the seller will accept but write an offer that the appraiser will establish the same value for. This is when it is important to find comps (comparables within 90 days) that are in a one mile radius and are of similar style. The higher value sales $400+ can have a problems due to the fact that there have not been many sales in that range to use. The lower sale $180,000 can have a problems due to so many low foreclosures in the neighborhood in poorer condition forcing value down.
Low appraisal are a reaction to the "crazy" appraisals of 2 years ago. In some cases the appraisers drove by the property and established value that way. Lenders used to be able to select who they wanted to go out and do the appraisal. It was felt that in some cases pressure was being put on appraisers to make the lender happy to establish value so that they would get repeat businesses. In other words not "true" value was being established.
The government has put strict guidelines on the appraisal process now that they are in the lending business. Appraisers now are given their business by a management company. This management company assigns the business. This new way of doing business has had some of the most tried and true appraisers leave the business. We now have newer appraisers, people who work part time, and people from far geographic areas that do an appraisal in a neighborhood they are not familiar with. Lenders cannot have any contact with the appraiser. This means it is the role of the listing agent to meet the appraiser and help him or her with their business.
Here are a few steps to avoid appraisal issues:
1) Watch the sale price so that it does not go way over list price due to closing costs.
2) Value needs to be established on square footaqe,bedrooms, baths, garage and not finishings such as granite.
3) Have the loan be conforming and avoid second mortgages
4) Leave 60 days for a closing and get the appraisal done as soon as possible
5)If it is your seller and they are going on to purchase another property, write that offer contingent on a successful closing of their property. Avoid the possibility of your client owning two properties.
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