The New Appraisal Dilemma
Now that Americans are getting back to buying and selling real estate, many are willing to use instant cash loans to fund various unexpected costs. One of the biggest concerns for any home seller is their appraisal. Although the price of a home can be based on the market assessment value, the appraisal can make, or break, a home price. Here is a common scenario in the world of selling real estate: A home is listed for $450,000 and the buyer offers $400,000. They eventually settle on a price of $425,000. Then just prior to closing, an appraisal is done where the maximum the mortgage company is willing to lend is $410,000. The buyer and seller are now left with a shortfall of $15,000. Walter Molony, senior public affairs specialist with the National Association of Realtors, said, “This has proven to be a fairly significant problem in today’s economy.”
What sellers can do
The question in this case is: What can sellers do to avoid the shortfall? A new problem more and more sellers are facing is the short appraisal. The recession created a decline in overall house values throughout the country. With the huge number of foreclosures in most neighborhoods, it’s difficult for appraisers to come up with comparable values that are accurate. Add to the mix the relative inexperience a lot of appraisers have with the new unstable market, and disastrous appraisals are imminent. Molony added, “Appraisers can be uneducated to begin with, but add to that the post-recession market and it’s a formula for problems.”
Buyers need to take proactive steps to protect themselves from the short appraisal. When talking with lenders, buyers can specifically request appraisers who come from their county. This can be helpful because the appraiser may have more experience in the area and have inside information on what the true neighborhood is like. Buyers can also request that the appraiser is certified. Various organizations like the Appraisal Institute’s Senior Residential Advisor or Appraisal Institute certifications can both signify a more intense education on how to appraise properties. Finally, buyers should also meet with their appraiser as they are doing the inspection so they can share information on the area. Leslie Sellers, president of the Appraisal Institute of Chicago, said, “Many appraisers are just pulling data out of MLS, or Multiple Listing Service, or off the deed at the courthouse and not checking it out. Most good appraisers will appreciate the information.”
The instant cash loan and appraisals
More homeowners are using instant cash loans to fund small house improvements. To make the process of an appraisal as simple as possible, homeowners are cautioned to do their own walk-thru of their home. Sellers added, “It can be helpful to have a few candid family friends walk through the house as if they were going to buy… let them be impartial and listen to their criticisms. Then fix the issues as quickly as possible prior to the assessment.” The key to pre-appraisal home improvements is to have the work completely finished before the assessment and to keep on budget. Small things like cleaning clutter, buying organizational tools, putting items in offsite storage and keeping things in order can make a huge difference when an appraiser comes in. Coupling affordable updates with first-hand information on the location of the property can greatly aid the appraiser in formulating their final documentation on the home.
Help the appraiser all you can
In the end, selling a house can be difficult in today’s market. If you are looking to sell, remember that there are some wise things you can do to help your appraiser target an accurate sales figure. The number he or she comes up with will dictate how much of a loan will be needed to get the property sold. For this reason, it is always best to try to offer as much information on the home as you can. If you can get as fair a price as possible, it may mean the difference between having to eat a large loss and needing small instant cash loans to handle the shortfall.