The Truth About Appraisals

Let’s face it, appraisals are one of the scariest parts of a real estate transaction. It can cause a deal to implode very quickly. It’s one of the reasons why having an experienced listing agent on your side is crucial. An agent has to sell a home twice: first to the buyer then to the agent.

My Strategies to Help Overcome Challenging Appraisals:

Appraisal Appointment

I never let an appraiser go to a property unaccompanied. Many appraisers have supra keys; if they think a property is vacant, they will go on their own and then you’ve missed your only opportunity to make an impact on the appraisal. I always meet the appraiser. And I make sure I come armed with recent sales, detailed information about the subject property, and any market stats that may prove helpful.

Engage the Appraiser

It never hurts to engage the appraiser. I’ve often heard complaints that an appraiser wasn’t interested in what the agent had to say. I’ve never had that experience. And I always found that if you position yourself in a supporting role and on the appraiser’s team, they are typically receptive to what you have to say and appreciate the effort you’ve made.

Demonstrate Value

If there’s something special about the property, I make sure I highlight it. Showing value to the appraiser is crucial to their calculations. I have put together shiny marketing materials specifically targeting the appraiser in order to illustrate what makes the house unique and worth the price we have sold it at.

Support Your Price with Other Offers

If you had multiple offers on a property, show those offers to the appraiser to reinforce the sales price. Buyers ultimately set the price and if you have more than one buyer making similar offers, it’s only more proof that your sales price is justifiable.

 

Additional Tips for Appraisals

It’s also good to know the rules that the appraiser needs to adhere to. When doing appraisals, they can use comps as far back as one year. Lenders always want to see a comp at the asking price, a comp below the asking price, and one above the asking price. If you have a challenging property, you may want to consider getting an appraisal done prior to going on the market. It will help prepare you for what to expect and if the appraisal is strong, I share it with the appraiser in the transaction.

Real Estate Advice: Low Appraisal for Refinancing

You can always try again. It’s just going to cost you each time you have to order an appraisal. When an appraiser is assigned you should make sure that this appraiser is familiar with the area. if the appraiser is from out-of-the-area, then you can request a different appraiser. Also, you should pull comps that you can give to the appraiser to help them do their job. You can probably ask your real estate agent to do this for you. I have clients who call me all the time for this assistance.
But keep in mind, appraisals for re-fi’s typcially come in lower than appraisals for purchases. One main reason is that when it’s a purchase the appraiser knows the purchase price and they just have to confirm if the price is above, below or at market value. When it’s a re-fi, the appraiser is not using any number to compare against. They have to come up with a number just based on the research they pull, and they are usually more conservative. For instance, I had clients who tried to re-fi their home. The appraisal came in at $1,100,000. But when we put their home on the market a few months later, I got it appraised at $1,335,000 (the selling price)..

Appraisals

Well, the unbelievable happened. A lender had an appraisal done a few weeks ago on a property that my client was buying, and the appraisal came in higher than the sales price. It does happen! If you have an appraiser who is familiar with the area, you have a much better change of getting an accurate appraisal. And my client got some additional built-in equity.