Appraisals Play Key Role in Successful Sale
Imagine having to run a marathon in almost impossible weather conditions. In fact, it is the worst race-day weather in almost 20 years. Somehow, you grit it out. Determination enables you to keep one foot in front of the other, even though the finish line is still miles ahead of you. Finally, you see the stadium. You know that once inside you have just two laps, and the race is over. As you approach the finish line you sense something’s wrong. Why are the race officials yelling and pointing fingers at each other? The only thing on your mind is finishing this stupid race and getting out of there. However, one of the officials stops you just short of the finish line and tells you that you must turn around and start over.
How would you feel if you were that runner? That’s about how sellers feel when they are told, about a week prior to closing, that their property won’t close because of a low appraisal. It’s a long walk back to the starting line.Low appraisals are becoming more common in our correcting market, and it’s adding to the frustration levels of sellers, agents and even “those nasty appraisers.” However, there are steps that sellers and agents can take to possibly influence the appraisal. In the cases where they cannot, they can at least minimize the disruption a low appraisal can cause.
The first step is to understand that the appraiser’s livelihood is tied to the success of our market, just like ours. They are not our enemy, although some agents and appraisers rank each other somewhere between attorneys and the Taliban. Appraisers want every property to appraise, as long as they have the proper supporting information. Working together, instead of yelling and pointing fingers at each other, will better accomplish that.
Sellers, you may be able to help your cause, particularly if you know inside information on a recent sale in your neighborhood, such as a death or divorce, something that would explain a lower than normal sales price. Appraisers welcome input and reasons to use or disqualify a particular sale. Agents, we can do a better job of being cooperative with appraisers when they call to verify the details of a sale. The information you give may help with one of my transactions and vise versa.
Buyers can lose because of a low appraisal, too. Therefore, agents should be proactive in helping a buyer select a lender. Local lenders use local appraisers. We should caution our buyers that the “lowest rate of the day” from one of the many Internet lenders may not be the best path to take. Internet lenders sometimes use out-of-area appraisers, who do not know the nuances of our market. Not only that, they may take the attitude that they will never have to do business with us again, so why go the extra mile in order to make the deal happen?
When a local lender is selected, agents should ask to see the list of approved appraisers. If a familiar name pops up, we may be able to request that person. It’s always better to work with someone you know. If you don’t know anyone, invite an appraiser to lunch. It may not change the outcome of a future appraisal, but you may find it easier to ball out someone you know. One of the most prudent things to do is to require the appraisal be done as close to the effective date of the contract as possible. Sellers, if you are selling privately, you should write this into the contract because if you do not specify the timing of the appraisal, then it may be completed according to someone else’s convenience, not yours. It may even take place after the mortgage contingency period is over. However, it could still ruin the sale because an acceptable appraisal is usually one of the conditions of loan approval. Either way, the property may not close.
Aggressive buyers may even delay the appraisal and use it to reopen negotiations to the unsuspecting seller. Sellers, your negotiation strength is weakened somewhat once your moving truck is loaded. A low appraisal does not have to kill the deal. Remedies include getting a second appraisal, renegotiation of the price or the buyer can increase the down payment to cover the shortage. Regardless, the marathon process of selling is not fun. Therefore, if you must run the race in the conditions we face, run it once. If you have to start over because of a low appraisal, the sooner off the starting line you find out, the better.
Originally published on August 26, 2007 in the News-Press
How would you feel if you were that runner? That’s about how sellers feel when they are told, about a week prior to closing, that their property won’t close because of a low appraisal. It’s a long walk back to the starting line.Low appraisals are becoming more common in our correcting market, and it’s adding to the frustration levels of sellers, agents and even “those nasty appraisers.” However, there are steps that sellers and agents can take to possibly influence the appraisal. In the cases where they cannot, they can at least minimize the disruption a low appraisal can cause.
The first step is to understand that the appraiser’s livelihood is tied to the success of our market, just like ours. They are not our enemy, although some agents and appraisers rank each other somewhere between attorneys and the Taliban. Appraisers want every property to appraise, as long as they have the proper supporting information. Working together, instead of yelling and pointing fingers at each other, will better accomplish that.
Sellers, you may be able to help your cause, particularly if you know inside information on a recent sale in your neighborhood, such as a death or divorce, something that would explain a lower than normal sales price. Appraisers welcome input and reasons to use or disqualify a particular sale. Agents, we can do a better job of being cooperative with appraisers when they call to verify the details of a sale. The information you give may help with one of my transactions and vise versa.
Buyers can lose because of a low appraisal, too. Therefore, agents should be proactive in helping a buyer select a lender. Local lenders use local appraisers. We should caution our buyers that the “lowest rate of the day” from one of the many Internet lenders may not be the best path to take. Internet lenders sometimes use out-of-area appraisers, who do not know the nuances of our market. Not only that, they may take the attitude that they will never have to do business with us again, so why go the extra mile in order to make the deal happen?
When a local lender is selected, agents should ask to see the list of approved appraisers. If a familiar name pops up, we may be able to request that person. It’s always better to work with someone you know. If you don’t know anyone, invite an appraiser to lunch. It may not change the outcome of a future appraisal, but you may find it easier to ball out someone you know. One of the most prudent things to do is to require the appraisal be done as close to the effective date of the contract as possible. Sellers, if you are selling privately, you should write this into the contract because if you do not specify the timing of the appraisal, then it may be completed according to someone else’s convenience, not yours. It may even take place after the mortgage contingency period is over. However, it could still ruin the sale because an acceptable appraisal is usually one of the conditions of loan approval. Either way, the property may not close.
Aggressive buyers may even delay the appraisal and use it to reopen negotiations to the unsuspecting seller. Sellers, your negotiation strength is weakened somewhat once your moving truck is loaded. A low appraisal does not have to kill the deal. Remedies include getting a second appraisal, renegotiation of the price or the buyer can increase the down payment to cover the shortage. Regardless, the marathon process of selling is not fun. Therefore, if you must run the race in the conditions we face, run it once. If you have to start over because of a low appraisal, the sooner off the starting line you find out, the better.
Originally published on August 26, 2007 in the News-Press
Labels: appraisals, buyers, market conditions, sellers