Last week, we began to take a look at a hot topic these days in real estate and that’s appraisals. We are seeing more and more people making solid offers on homes only to find out two weeks later that it did not appraise for the asking price. There are many reasons for this and if you would like to re-read part one of this series, you can, at www.coloradodreamhouse.com/denverpost
Last week, we spent a fair amount of time talking about what buyers can do to protect themselves in the asking price versus appraised price dilemma. This week, I want to pass along some information for sellers to protect their homes from appraising well below the asking price.
Tip #1) Understand and be realistic about what is the market value of your home. I know what you want to sell it for, but remember, there must be comparables in your market to justify it.
Tip #2) Don’t look at comps that go back farther than 6 months. In a rapidly changing market, appraisers are going to be first looking at sold comparables in the last three months and properties that are under contract. Looking at comparables from 12 months ago is an extinct barometer.
My business partner, Gary Lorhman, and I started a policy in the beginning of May when the new Home Valuation Code of Conduct rules came down from Fannie May and Freddie Mac. We simply made a decision to meet the appraiser representing the buyer at every one of our listings that was under contract. At that meeting, we would greet the appraiser, tell them about the special features of the home and hand them the comparables which we used to price the home. That’s it, no more and no less. To date, our system has worked 100 percent. Every one of our properties that we have sold on behalf of our clients has appraised for the sale price. It’s important to point out to people that HVCC does not prohibit a realtor from speaking to an appraiser and providing information on comparables. I’ve found that sellers and agents have been scared into thinking that a conversation with an appraiser would land them in the big house. Not true, so be smart, price it right, and make your homework available to appraisers.
Dan Polimino is a Realtor with Fuller Sotheby’s International Realty. He can be reached at DPolimino@fullerproperties.com and www.coloradodreamhouse.com/denverpost