Selling or Refinacing but facing Low Appraisal.. what can you do?
Reading all the big advertisement and news about low interest rate, real
estate market has rebounded, few of my friends/clients in
Northern Virginia area
thought it may not be a bad idea to refinance their homes and save
extra bucks on their monthly mortgage.
Went to their lenders got the
incredible rate on the home but when the appraisal came out they were
shocked that their homes are still not within the ratio of what lender
wanted in one case it was 80% loan amount and 20% equity. Basically they
may have to bring money to close the deal.
After they shared
their experience, I asked them if they reviewed their appraisal report
and have asked a Realtor to help them with the comparable in the
neighborhood? I wasn't surprised when my savvy friends did not bothered
to ask for the appraisal copy (which they paid $$$ for). They took their
lender's words and decided not to refinance their home.
Few
months back I had a listing which was appraised bit lower than our
contract sales price. As a professional Realtor who knew the area, I
was bit surprised how this could have happen. I asked the selling agent
to share appraisal report.
Now the big question what can one do
?????
On my listings two things happened, the appraiser was not
a local person, hence did not know the area/neighborhood. Second
mistake which was him not being local, he had mixed the communities when
he created the report. The two neighborhood hold a vast difference in
their prices and that was the reason appraisal came out lower.
To
correct this, we appealed the appraiser. I provided the comparable plus
all the updates my clients had done in past couple of years including
new roof, windows & updated kitchen compared to the homes they had
been compared to. It is called the appeal process. In this process you
need to provide as much details as possible between your home and
comparable homes. If you are a consumer ask a Realtor to help you out in
preparing the comps of your home.
Submit this to the lender and
request for the appraisal to re-evaluated the comps and provide updated
appraisal report. This has be to accepted by the underwriter so work
with the lender that knows the process.
To summarize here is what
you can do...
1. Ask a local Realtor to help you with the comps
before you start your financing process.
2. Prepare a list of recent
updates you have done in the home. Painting a wall is not an update,
roof, window, kitchen, finishing basement are all example of adding
value to the home.
3. Ask the appraiser where they are coming from,
request for a local appraiser who knows the market. Give them a copy of
the comps that your Realtor had prepared for your home plus list of
updates in the home.
4. Ask your lender for a copy of the appraisal.
5.
If low, prepare as much as possible to justify/challenged the appraised
value of your home.
Hope some of you may be able to reap the
benefit about this process.
Comment Notification
Subscribe to this post's comments using