WHAT IF
YOUR HOME DOESN'T APPRAISE?
Housing
markets are constantly changing, heating up or cooling off. For that reason,
bank appraisers are hired by lenders to make sure your home is priced fairly
and to current market conditions.
Appraisers use a formula that includes historical
trends, pendings, solds, features, amenities and days on market to make sure
that your home's current value reflects housing conditions in your market.
Your
home's market value has nothing to do with what you paid for it, how much money
you need to retire or how much you need to buy your next home. Your real estate
agent's market analysis doesn't determine market value -
only a range of prices so you can choose a listing price that will help your
home sell quickly.
Outside forces such as the economy can cause your home
to depreciate. So can allowing your home to deteriorate by not making repairs
and updates that keep up with buyer demands.
So what can you do if your home doesn't appraise? You
can amend the contract to the appraised price or lose the buyer.
But wait, you may have other options. You can
challenge the appraisal.
In some cases, banks use appraisal management
companies that hire out-of-area appraisers, or they use low-cost appraisal
products like automated appraisals instead of a full professional exterior and
interior appraisal.
This is where your real estate professional really earns
her stripes. She can determine what kind of appraisal was used to arrive at the
home's valuation. If the buyer paid for a full appraisal and only received a
drive-by, for example, the appraisal won't reflect your home's interior
condition, so your new kitchen won't count.
Your agent can also examine the homes that were used
in the appraisal and determine if the comparables are truly similar or not. If
not, you have a fighting chance.
Have your agent provide an updated CMA (comparable
market analysis.) It could be that new market information is available, such as
homes that have sold recently that will help your case.
If the other comparables aren't in your favor, you may
have to lower the price so you can proceed to closing.
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entire article here.
