For your best chance at successfully disputing a low appraisal, come prepared with evidence-based research about potential home improvements the appraiser missed, errors in the report, or inequivalent comparable real estate.
One of the purposes of appraisals is to protect the buyer from overpaying for a property. This is where having an appraisal contingency in place can be extremely important. An appraisal contingency gives you the right to renegotiate the price if the appraisal comes back lower than your agreed-upon purchase price.
If your real estate agent finds other comps that support the sale price, you might still move forward with a reconsideration of value. According to a white paper from Fannie Mae , 8.
Your lender will be able to walk you through the process. There are a number of factors that can lead to a low appraisal. Sometimes the issue is on the side of the appraisers, or maybe homeowners are just not being realistic in the way the property is priced. Let's run through some scenarios. If your real estate agent is able to find better comps, you may be able to get a reconsideration of the value on that basis. This could impede the ability to get accurate property values.
Therefore, you may be able to work with a lender if you can find more accurate comps, for example. One of the key factors to consider is whether recent sales of homes with similar features backup your assertion of increased value. If you and your real estate agent can find those, you may find that you have a good case. Everybody makes mistakes, and appraisers are not immune. This process may actually be led by your lender. If they find an omission or need something clarified, find something that was calculated incorrectly or any other mistake, they may ask for the appraiser to resubmit.
If the appraiser is new to the area, they may not be as familiar with the market and unable to find appropriate comparables for recent sales. Are your assessments really based on market value or is it more about what the home means to you?
The amount of time a reconsideration of value can take may vary. If the error is clerical in nature, it may be resolved in a few hours. On the other hand, they can take a little longer if the appraiser needs to come out to the property and reevaluate for any reason. You just need to be prepared.
Feel free to speak with your mortgage officer in order to determine what format they suggest you present your evidence in depending on the reasoning for a reconsideration of value. Lear remembers being hired by a homeowner seeking a second opinion on the appraisal of his home in Edina, a Minneapolis suburb. These are terrible comps. In the end, you may or may not be able to get the value changed.
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It was a win-win for both parties. Not every low appraisal has a happy ending like this. Every circumstance is different. You need to weigh your options and figure out which is the best way to go for your financial and life circumstances.
One of the more common ways an appraisal comes in low is when a homeowner sells their home for sale by owner and the buyer is unrepresented by a real estate agent.
Talk about the blind leading the blind. Use these additional resources to better understand home values and how to deal with a low real estate appraisal. About the author: The above Real Estate information on the how to challenge a low real estate appraisal on my home was provided by Bill Gassett, a Nationally recognized leader in his field.
Bill can be reached via email at billgassett remaxexec. Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise! Bill Gassett is a nationally recognized Real Estate leader who has been helping people move in and out of the Metrowest Massachusetts area for the past thirty-four plus years. Thanks Bill. I really appreciate you including the link to my template too. This is a very important topic.
You are very welcome Ryan. It was an excellent addition to explain to everyone the right way to go about disputing a low real estate appraisal. I say get an appraisal before you list then you can price it right, dispute low balls rationally and add validity to your dispute. Very Well written Bill. You have explained the reality of appraisal challenges that we face on a weekly basis as real estate agents.
This is one of the best all around articles I have seen explaining how to fight a low real estate appraisal. As an agent, I bring the current comparables to the listing appointment. I let the sellers know that the best way to price the home is for the current market; then we can expect to get a fair appraisal. I had difficulty with a low appraisal this past year with a listing in escrow, getting a ridiculously low value. Because the market was hot, especially with low inventory, I had already done an independent appraisal several months before putting the home on the market.
I listed it just below the appraisal. Knowing that it was not a tract home, but a custom built home, I felt confident in its value.
We held firm, and closed the deal. Thank you again for spelling it out succinctly, Bill. This is a great article on how to dispute a low real estate appraisal. Thanks very much for the comps on how to challenge a low real estate appraisal. It is very much appreciated. I hope this will become a guide for other real estate agents to use when they need to fight an appraisal they know is wrong.
As an appraiser for the last 23 years and a Real Estate Broker for the last 2. Thank you for writing it. Email the appraiser this information before the appraisal is finished.
Hiring your own appraiser is always a good idea in my opinion. Great article on how to dispute a low appraisal! I am going send this to my Sellers Thanks for your timely and informative information! As a state certified appraiser, I try to stay totally logical and just look at the facts.
And this is my suggestion for low real estate appraisal. Once you have copies of all your comps and any other supporting documentation, you can present all that to the appraiser and ask them to reconsider their determination. This is usually done via the bank or mortgage company that originally ordered the appraisal.
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