-= Tips on avoiding an appraisal issue for your home purchase, or overpaying for your new home =-

By
Real Estate Agent with Keller Williams Realty - Lakeside Market Center


Mortgage appraisals in Macomb County MIWhen you plan on purchasing a home using mortgage money it doesn't matter what type of mortgage you are applying for (FHA, VA, Conventional) - your mortgage lender is going to order an appraisal of the homes value.   They will want to make sure that the amount of money you are asking to borrow is not more than the home is worth in todays market.

 

Below are a couple of things that I do as a buyers agent to help make sure that my buyer clients are not wasting their time and money on a home prior to writing the offer:

Investigate the last 90 days of sold homes within a 1 mile radius, in the same school district and of similar construction & features.  (Do not consider sales data greater than 90 days unless you have fewer than 3 comparable sold homes in that initial look back period.)

Include the distressed sales in the search of sold homes.  (They are the norm now, unfortunately, and you can bet that the appraisors are going to use this data in their reports.)

Deduct sellers concessions that were paid by the seller of the sold homes to the buyers from the "sold" prices.  This deduction will reflect the market value of the home that sold more accurately.

Ask your agent to prepare an analysis using this type of data to present to the seller and their agent when your offer is presented.   It is much easier for the seller to understand how you came to the price of your offer when they have hard raw data in front of them.  It then becomes more of a business decision to them, and less of a personal affront if your offer is much lower than their asking price.

If your offer is a sound one, based upon recent data and your own personal view of the homes value, and it is not accepted by the seller don't be shy about walking away and finding another home.   A buyers agent who is working for you would much rather have you walk away then to spend emotional energy and financial resources to continue the process of purchasing a home without much of a chance of it passing the lenders appraisal guidelines.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Home Buying
Groups:
Michigan Real Estate
Tags:
macomb county mi home buyers
appraisals coming in low on a home purchase

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Ambassador
837,996
Charlie Ragonesi
AllMountainRealty.com - Big Canoe, GA
Homes - Big Canoe, Jasper, North Georgia Pros

The appraisla issue with the new rules and folks who have no idea of your area doing appraisals is going to be an issue in 2010. Thanks for the tips

Jan 24, 2010 10:54 PM #1
Rainmaker
212,540
Dennis Swartz
Full Circle Property Management - Columbus, OH
MBA, GRI...experience counts!

Good ideas. I am not sure the seller will be so happy with your data, especially in a declining market but it is a situation that comes up a lot and needs to be addressed.

Jan 24, 2010 11:01 PM #2
Rainer
340,913
Kris Wales
Keller Williams Realty - Lakeside Market Center - Macomb, MI
Real Estate Blog & Homes for Sale search site, Macomb County MI

Charlie,   I think if we all look at the accurate data we will get a good feel for what the appraisors will see.  It shouldn't be too hard to avoid issues (if the appraisor is from the same area :-)

Dennis,  As a buyers agent it isn't my job to make the sellers happy. Their agent should have been giving them continual accurate data and regular updates as to their market value. This way, there shouldn't be any surprises.

Jan 24, 2010 11:04 PM #3
Ambassador
920,196
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

I deduct the concessions from my CMA's too.

That is the true price. Appraisers look at it.

Since we have the same data, I err on the side of conservative. Also update every 3 months.

Good information for our buyers in Michigan.

Jan 24, 2010 11:27 PM #4
Rainer
340,913
Kris Wales
Keller Williams Realty - Lakeside Market Center - Macomb, MI
Real Estate Blog & Homes for Sale search site, Macomb County MI

Missy,   Like you, I err on the side of conservative.  The depreciation is still going on in most areas here, so to come in 3-5% less than the supported comps makes sense in quite a few cases.

Jan 25, 2010 12:20 AM #5
Rainmaker
564,223
Steve, Joel & Steve A. Chain
Chain Real Estate Investments & Mortgage, Steve & Joel Chain - Cottonwood, CA

Kris, I laugh when buyer's agents come and offer 30-40K below comps and appraisal.  Most seller's agents wouldn't take a listing over priced 30-40K. Why continue to drive buyers around expecting to procure a sale? At least the agent knows the offer is so unrealist they don't put it in writing. lol

Steve

Jan 25, 2010 02:43 AM #6
Rainer
261,429
Anthony Vosilla
Tony's Appraisal Services - Centereach, NY

Kris,

Just a quick comment about your post

""Investigate the last 90 days of sold homes within a 1 mile radius, in the same school district and of similar construction & features.  (Do not consider sales data greater than 90 days unless you have fewer than 3 comparable sold homes in that initial look back period.)""

Actually 3 is not enough from the appraisal stand point...many lenders auto reject appraisals with only 3 sales..Also present other comparible listings looking at it utilizing The Principal of Substitution.  Why would a buyer pay this price when the can get this listing for this much.

Also, if you can find out the contract dates of these sales...some sales will be held up by kids finishing school and other issues.  Suddenly you have a sale showing up in the past 30 days which went to contract 4 months ago and if the market is declining the sale will not be representive of the current market.

Also consider obtaining anther data source (if possibe) as not all sales (at least in my area) do not go thru MlS.

 

Jan 26, 2010 01:48 AM #7
Rainer
340,913
Kris Wales
Keller Williams Realty - Lakeside Market Center - Macomb, MI
Real Estate Blog & Homes for Sale search site, Macomb County MI

Steve and Joel,   We only see that here (offering 30 or 40 under) if a home is in poor shape in comparison to the comps.  Otherwise I'm not seeing it. 

Anthony,   Good words of wisdom, thanks. (Especially the "more than 3")  Usually that isn't a problem, but in some of our more rural areas it can be.  I never thought about the contract dates (from pending to closed) but that is another good area to look at.  Thank you so much for your input.

 

Jan 30, 2010 11:18 PM #8
Rainer
478,183
Not a real person
San Diego, CA

Just stopped by to let you know that there's an ActiveRain Super Bowl Party going on. Stop by if you have a chance.

Feb 07, 2010 10:40 AM #9
Rainmaker
1,516,122
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

That is good advice. They need to rely on "just the facts" and they will be ok!

Feb 15, 2010 11:32 PM #10
Rainer
225,344
Dave Sullivan
Real Estate One - Birmingham, MI
Michigan Realtor with an investor viewpoint
 

Excellent information I will forward it if that is ok? thank you!!!

Nov 16, 2012 07:57 AM #11
Rainer
340,913
Kris Wales
Keller Williams Realty - Lakeside Market Center - Macomb, MI
Real Estate Blog & Homes for Sale search site, Macomb County MI

Dave, I would rather you didn't forward it, especially since you didn't state to whom the recipient would be.  It's also a 3 year old article.

Thank you for asking though.  I do appreciate the courtesy.

Nov 16, 2012 08:11 AM #12
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainer
340,913

Kris Wales

Real Estate Blog & Homes for Sale search site, Macomb County MI
Ask me a question
*
*
*
*
Spam prevention

Additional Information