Make sure the property you want to sell – or purchase – gets through the appraisal process without drama
If you’re worried about a low appraisal affecting your real estate transaction, preparation is the key, according to Frank Gregoire, past chair of the National Association of Realtors appraisal committee. Both buyers and sellers can take steps to remedy the situation. Here are his tips:
Advice for Sellers:
• If the appraised value is unacceptable, cancel the contract and put the property back on the market. A new buyer, new lender and new appraiser could deliver different results.
• Offer to pay for a new appraisal. Request that the buyer change lenders, preferably to a lender that has closed deals in the building, or neighborhood.
• Contact the state regulatory board and file a formal complaint against the appraiser if there is reason to believe the appraiser acted unprofessionally or made egregious errors.
• Do your homework. Know what other units in your building, subdivision or neighborhood have sold for and ask your real estate agent to provide printed materials detailing those sales.
• Provide the appraiser with all offers received to show market demand, if multiple bids were received.
• Get a pre-listing appraisal. Hire the best appraiser you can find before listing the property. When the lender’s appraiser comes, hand your professional appraisal report to him for guidance.
Advice to Buyers:
• Buyers can cancel the contract without penalty as long as the contract is contingent upon the property appraising for contract price.
• The buyer could use the appraisal as leverage to negotiate a lower price.
• The buyer has the right to request a copy of the appraisal and challenge the appraiser’s report with new data.
• Buyers should always use a preferred lender for condo developments and new housing developments, to decrease the chance of underwriting and appraisal mistakes.