Dealing with Low Appraisals
Whether you are interested in purchasing or selling a home, the appraisal process is an important piece to understand. Appraisals can be challenging, particularly because the Denver real estate market has recently shifted upward. A report from CoreLogic HPI shows that Colorado home prices jumped 10.4% from March 2012 to March 2013! Unfortunately, low appraisals have been holding back more and more home sales as the housing market continues its recovery. Understanding how to deal with — or entirely avoid — a low appraisal is crucial to the success of the sale process.
When a buyer is financing a purchase, their lender requires an appraisal to confirm the market value of the property. If the contract price is below or in accordance with the value established by the appraiser, the contract will move forward. However, if the appraisal comes back lower than the contract price, then the process is interrupted.
As a buyer, there are several options to dealing with a low appraisal. One of the options for a buyer is to cancel the contract, as long as this contingency is built into the contract. Another option is to challenge the appraisal. Normally, buyers pay for the appraisal which gives them the right to review it. If you discover factual errors, you can most likely have the appraisal changed. An additional option is to request that the price be reduced to the level of the appraisal’s valuation. If the seller is unable (or unwilling) to reduce the sale price, the buyer or the seller has the ability to request a new appraisal. The buyer could also choose to make up the difference in cash if they felt the value would be supported in a time-frame with which they were comfortable.
As a seller, your main concern is partnering with a real estate professional who can properly help you price and prepare your home’s sale in order to avoid the difficulties of a low appraisal altogether. Find a Realtor that is experienced in your neighborhood and who has comprehensive knowledge of the recent sales. It is also helpful to document any improvements that you have made to your home and provide those details to your real estate team. Listen to your Realtor’s suggestions on maintenance repairs and staging in order to make a positive impression on both potential homebuyers and appraisers.
When you work with The Steller Group, we make the appraisal process as straightforward as possible. Our clients are well served by our commitment and local expertise. In 2012, The Steller Group more than doubled the homes sales in 80122 of any other Realtor or group. This advanced knowledge of the Centennial real estate market ensures that our listings are properly priced and positioned and that our buyers will not pay over-market. If you are in need of assistance, please contact us at 303-539-5228 or Info@StellerRealEstate.com.