How do you describe where it is? You know, I have very fine hair, but it’s static and it just looks like I stuck my finger in an electric socket all the time. But it’s OK.
Transparency in a Transaction is Key
And today’s topic that we’re speaking about is when your appraisal is less and the contract price. Now, which side are you looking at this from one side at from a buyer’s standpoint as we have a buyer situation yesterday. OK, so let’s take it from step one step.
Client is putting in an offer, OK, and you’re representing the buyer. Go over the comps.
You should be going over all the comparables and let them know, hey, I think we’re at the tip top of what market value is or kind of where you are.
That way they’re prepared for what happens. And, you know, a side effect of being in a seller’s market is that everything’s, you know, it’s behind.
So in a seller’s appraisal, prices are creeping up as it goes. It’s adjusting slowly, slowly.
Kind of a side effect of being in a really hot sellers market is that the appraisals tend to come in lower than the contracted price.
So, you know, OK. And so, yeah, it does make sense that you have to make sure that the house is really the size that it is. And there’s a bunch of different ways to look at sizes of properties you can measure from interior walls or exterior walls and you can go off plans. There sometimes are rooms that weren’t really present at our present. There’s all types of things that size. Yes.
So, you know, knowing that you have to do all your due diligence up front and guide them and let them know.
And then you need to explain to them in the event that your appraisal, because they’re getting a loan, the lender orders the appraisal and they do that to protect themselves, to ensure that they are lending because they never go and visit the properties to make sure they are lending on the true market value of the home.
So that’s the collateral putting themselves in a situation. OK, so so, yes, you need to know something that we do on the selling side is if, for example, if you have a brand new construction home and you modify it in some way, shape or form, it’s very likely that it could have been recorded as the wrong square footage. Right. We have that situation we talked about before on our home.
But, yeah, you want to make sure that you know your square footage.
Now, appraisers don’t go just on the square footage. They’re looking at a number of bedrooms and baths. You talk about this salon, right? The features and features and functions of the home.
And, you know, we’ve learned this, too, that, you know, they take sales calls, things that have actually sold closed on date. Also, in a market like this, they do look at pending sales and they do look at homes that are currently listed for sale and kind of time on the market to right.
When it gets really. Yes, they take out all the factors and, you know, analyze them all.
So if you’ve done your due diligence and you’ve guided your client and everything, you know, goes through, and then all of a sudden you get your low appraisal, what do you do? First, you need to review that appraisal. Your
lender will will review it, OK?
And you want to get a copy of it and review it, too. And you want to double check these things are the number of bedrooms and that’s correct. Features garage size. You know how many garages?
You know, I think it has a pool or not just all these different features and, you know, what is it sitting on? Because a lot of times, if they don’t know the back of Greenbelt and you have privacy behind you, you know what? Values can really be important, especially where we live. If you have a greenbelt and you have the privacy or you have water or you have some, you know, future like that weighs heavily on the lot value. So, you know, if they haven’t given any you know, if you don’t think they’ve given it enough value, then you can go back.
And after you’ve looked at it and kind of discuss that, you need to talk to the lender. You don’t want to contact the appraiser. You want to go back to the lender and say, hey, you know, there are some things that I notice that they may have missed on this.