Last week, Barbara Corcoran, The Today Show’s resident real estate expert, discussed the impact that low appraisals are having on the housing market:
I touched on this point a few weeks ago in a blog post discussing the pitfalls homebuyers and sellers are often encountering in today’s market. However, I think The Today Show piece does a good job of shining a light on a how big of a problem low appraisals have become nationwide.
It’s also important to note that appraisers (and banks and others involved in a home sale transaction) are not necessarily doing anything wrong. In fact, they’re just following the rules put in place by the Dodd-Frank Wall Street Reform and Consumer Protection Act. But one of the unintended consequences of the act is appraisers being assigned to assess the value of a home in areas that may be unfamiliar to them.
I experienced this first-hand not too long ago. I had a home listed here in St. Johns County, Florida, a coastal county near Jacksonville. When we got an offer on the home, the buyer’s lender sent an appraiser from further out west in Clay County. While the appraiser did a fine job, there was quite a bit of added stress and work on all of our parts. The appraiser had to work extra hard (and fast) to get up to speed with the peculiarities of Marsh Harbor, a small community along the Intracoastal Waterway where the home was located. At the same time, I was able to point her to some appropriate comparable properties to consider. But ultimately, it was up to her to learn “on the fly” what constituted real value in an unfamiliar area.
While my transaction went smoothly, many others don’t. The real estate market really is hyper-local. So having an appraiser who’s familiar with area communities, as well as the things that make each neighborhood unique and what features drive value, is extremely important.
What to do when it’s time for your appraisal
Ultimately, the appraiser in any transaction is the final arbiter of value. And no one can put undue pressure on an appraiser in an attempt to increase value. There are, however, a few things you and your Realtor® can do to help the appraisal process along:
- Have your Realtor® provide the appraiser with some accurate comparable properties from the area (he or she will likely already have these from when you decided on the home’s price originally)
- Be sure to give your appraiser a thorough list of any upgrades that have been done to the home, or any unique features that make it stand out from others in the neighborhood (remodel, updated kitchen/baths, pool, etc.)
- Have a Plan B in case your appraisal comes in low
Ultimately, having a realistic mindset, and doing a little extra planning upfront, can make the appraisal process go a bit more smoothly. If you have questions about appraisals, or the value of your home, please feel free to contact me.