Home Appraisals and the Appraisal Process. Do you know what to do if your home doesn’t appraise at the purchase price?
Sometimes properties don’t appraise at the purchase price. This can happen when values rise quickly and there’s a large percentage of cash buyers. The Tampa real estate market is one such market.
This is why having a property appraisal is important when buying a home, On top of that, they are required by mortgage lenders.
A home-buying contract is typically contingent upon the buyer obtaining, at the buyer’s expense, a written appraisal from a licensed Florida appraiser stating that the appraised value of the property is at least the purchase price on or before a specific date. Sometimes a contract is NOT contingent on an appraisal. It is important to ask your Realtor to add an appraisal contingency addendum to the contract, otherwise if the property does not appraise, you could lose your escrow deposit if you decide to cancel.
If the appraisal finds the property is valued at less than the purchase price, the buyer must inform the seller in writing on or before the appraisal due date.
The buyers has two options if the home doesn’t appraise at the purchase price.
1. The buyer can cancel the contract in writing and any deposit paid will be refunded.
2. Continue with the contract but renegotiate the purchase price.
According to a survey by the National Association of Realtors, 15 percent of contract are renegotiated, 11 percent of contracts are cancelled and 9 percent of contracts are delayed.
How a Seller Can Help the Appraiser
If you’re a seller, there are things you can do to help an appraiser, and both you and the buyer are permitted to be on the property during the appraisal as are your Realtors.
Prepare an “Appraiser’s Package”. This package should include
- HOA documents
- floor plans
- inspection reports
- neighborhood details
- recent similar-quality comparables
- detailed list and dates of upgrades, remodels and costs
- energy- efficient green features
Answer any questions the appraiser has and give him or her the necessary space and time to complete the inspection.
How to Dispute an Appraisal
Sometimes an appraisal is wrong. This can happen when:
The comparables used were lower-priced foreclosures and short sales
The property value was not adjusted to reflect changing market conditions
An inexperienced or out-of-town appraisers was used
There was a long turnaround time, delaying closings, by the appraiser and the lenders
What happens if an appraisal comes back and you, the seller, believe a mistake has been made?
Your Realtor should contact the lender in writing asking for the appraiser to reconsider the report.
The appraiser should be asked to:
Consider any additional information provided by the Realtor.
Provide additional information or an explanation for the appraisers initial conclusion.
Correct errors in the appraisal report.