Friday, February 12, 2010

You Might Not Need A REALTOR IF....Reason #8

You Might Not Need A REALTOR IF.... Reason #8
You Know How To Deal With Low Appraisals

Don't let you're money go down the drain!

Although I briefly mentioned this in prior posts, it is critically important and therefore I am focusing on it as it's OWN separate issue.  Appraisals. Ugh.

Appraisals are a key ingredient in most sales.  While there will be some cash sales out there, even some of those sellers will want an appraisal, especially in a market like this one.  No one wants to overpay for real estate today.  But, the vast majority of buyers will be getting a loan and financing their purchase of your property.  Their banks will REQUIRE an appraisal.

Some segments of the market are appreciating, while others are still on the decline, and still others have no activity at all.  This makes it very hard to get a good appraisal.  But, let me ask you this, Mr. Seller...."Honestly, would you know a good appraisal from a bad one?  How?"

If your answer is you'd know because the appraised price was lower than your sales contract, well, you could soon find yourself in a pickle.  No bank, no appraiser, can make a change based on that.

Maybe you think you'll rely on zillow, or tax assessments?  Nope.  Irrelevant.  Sorry.

You'll tell them that your neighbor sold his house last year for $25K more.  Nope again.

You will need to SHOW market knowledge to an "expert" in such a manner that it doesn't show bias.  Good luck with that if you are the seller.  I couldn't be unbiased if it were my property.  I wouldn't be completely unbiased if I were your listing agent, but I could handle the matter in a way that seemed unbiased.  I have resources to use to support the price, and market knowledge (as well as the collective knowledge of the agents around me). 

And, what if the appraiser refuses to make a change?  Can you get a new appraisal?  Probably not, especially if you're on your own.

What if you cancel the contract all together and go with another buyer?  Well, depending on the type of appraisal, it may be SIX MONTHS before you can get a new appraisal if the new buyer is using the same type of financing - EVEN if it is with another bank.  Did you know that?  Most people don't, but I promise it's true.

You see, there are "rules" and then "exceptions" to the rules.  A true expert in their field can help you navigate your way through tricky situations like low appraisals.  While ultimately, you may be forced to accept the low appraisal and even lower your sales price or provide another concession because of it; that should NOT be your only defense.

A strong listing agent will have many potential alternatives for dealing with appraisal issues.  Market knowledge and resources are the first line of defense and with a strong argument, and with the right presentation, this is often all you need.  Other times, it is a matter of getting to someone who will listen - and having those inside connections at the bank can help.  But, even the best agent can't know the VP of every bank in the nation.  So, then what? 

The RIGHT agent will be able to answer this question as it pertains to YOUR property and YOUR most likely buyer.

If you are in the mortgage industry or are an appraiser, you may (or may not, depending on your experience level) know how to deal with low appraisals so that the vast majority of the time the purchase can move forward as planned, with no further concession by the seller.  Otherwise, you might just need to hire a real estate agent to help you with the sale of your house.


Stay tuned to the REAL ESTATE WHISPERER for the rest of the posts in this series.

In the meantime, if you need honest feedback about whether you should hire a REALTOR to sell your home, and if you're in the Loudoun/Dulles area, feel free to call me. I am happy to talk with you over the phone about some of the pros/cons of hiring a real estate agent.


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