You want to know what I think is the most stressful part of any real estate transaction is the appraisal because it happens at the very end. So after you are already fully invested and excited about making a purchase, you’ve already got movers lined up, you’ve already gone through all the hassle of getting your loan approved inspections done, then the appraisal happens, and it can make or break the entire deal. In this episode of selling with Shannon, I’m going to talk about four ways that we proactively avoid a bad appraisal in the first place.
So the first way to avoid a bad appraisal is to price your home correctly when you are selling it. an appraiser is going to assign the value of your home based on the most recent homes that have sold in your area, not what your neighbor has it listed for not what’s pending, but what is actually closed. So we will help you look at what are the most recent comps. And ideally we want to find at least three or four that would justify the listing price.
Buyers also know if you’re overpricing or underpricing a home, but trying to get it right at market value is the best strategy because that’s likely where an appraiser will also value your home at now, the second thing is that if you have a unique property, and let’s say there aren’t really any comps because your home is one of a kind, we can proactively reach out to the appraiser and let them know what special features you have. Maybe you have a huge yard, maybe you’ve done some big upgrades you have a guest home something like that, we can reach out and let them know what kinds of upgrades and things we want to have factored into the value of your home.
Now if your home is truly unique, what I would call a unicorn property, then we can also hire an appraiser upfront before listing the home so that way we can price it accurately in line with its appraised value. The third thing we can do is that if we know a neighbor has a home that is a perfect match a great comp for your house. And let’s say it’s pending, we will call those listing agents and ask them when is that property actually going to close? And what is the sales price going to be?
So let’s say the most recent sold in the area was 650. But we know that the neighbor has it under contract for seven, we can delay the appraisal on your home until after that when closes that way that $700,000 home could be used as the most recent comp and that can help your house to get higher value. Now the fourth thing we try to do is pick the right buyer so that the appraisal will not be an issue for them.
So let’s say you get multiple offers on a home, we’re going to find the buyer that chose to pay over but they have the financial strength to show that yes, they can do their downpayment plus pay any appraisal gaps. We require offers that are over asking to include an appraisal waiver, basically saying that the buyer will waive the risk of a low appraisal and they choose to pay that gap. Instead of terminating the contract that’ll help you prevent any problems if the appraisal comes in closer to list price and not at their offer price.
Now we’re proud to say that in the last couple of years, we’ve only had three instances where an appraisal came in short, and each time we were able to work through it. In some cases, our buyers had plenty of money to pay that gap and they were confident signing an appraisal waiver. In other cases, our buyers did not sign the appraisal waiver, we actually offered below asking price and still the appraisal came in short.
So in those instances, we were able to negotiate with the seller so that they came down on price or met in the middle. Both parties were happy and still able to close on the home. It’s so important that you pick an agent that knows how to proactively avoid problems. That’s what we thrive on. We are problem solvers for our clients.
