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What's Your Home Worth?
Get Your Home's Value! Receive a free comparative market
analysis plus neighborhood comps!
Your best source for Real Estate in Wichita
Kansas
No one knows Wichita homes and Wichita neighborhoods better
than Larry Underhill. He has been the number one Realtor in the Wichita real
estate market for the past six years and has been one of the top three Realtors
in the United States for the past five years.
Wichita Real Estate
You will
find listed here some of the more progressive Wichita real estate agents who
have turned to the Internet as a means of putting local residential properties
before a national home buying audience.
Appraisal vs. Market Value: How to Avoid Pitfalls in the
Sale of Your Home
by Jeanette Joy Fisher
When you sell
your home, appraisers use comps (comparable market sales) of local properties
sold within the last six months to value your home. With today’s rapidly
rising seller’s market, six-month-old information is ancient history.
Appraised value does not always equal the true market value, or what the home
will sell for on the open market.
Realtors will give you a comparative
market analysis, an informal estimate of market value based on comparable
sales. Lenders, on the other hand, will use the appraised value to determine a
new mortgage amount. Some lenders require that the stated property value covers
the mortgage amount plus their selling costs in case of foreclosure. For this
reason, a sale may fall through if a home sells on the open market for more
than the appraised value, which often happens in bidding wars over hot
property.
We learned the importance of securing a sufficiently high
appraisal when we sold a rental property in Lake Elsinore, California. We
listed the house for $234,700 on Friday. By Monday morning, we had three
offers: $245,000, $255,000, and $260,000. We accepted the one for $255,000
because the buyers had $80,000 down, reassuring us that they had sufficient
funds.
As usual, the lender sent an appraiser to review the property.
This busy appraiser didn't take the time to view all the upgrades we put into
the custom-built home. Even worse, he used only comps from the local one-mile
radius. Because this home is close to a shopping district, there were not many
homes sold in this limited area during the six-month period.
The
appraiser used comps six months old; during this time housing costs in Southern
California appreciated around thirty percent. Sales from six months previous
should have gone up in value by $30,000 on a $200,000 home. This means that our
home should have been worth $250,000 to $260,000, especially since buyers are
willing to pay this price on the open market. To increase the value of this
home, at the time there was not another three bedroom home listed in the area
for under $250,000 (excluding manufactured homes). However, the appraiser
valued our home for only $230,000 -- and we would have lost the sale if the
offer did not include a sufficient down payment.
Because a low
appraisal can kill your sale, finding a buyer with a large down payment
provides you with a safety net. You may also choose a buyer with strong credit
who doesn't have to put a large percentage down. If you think that your
home’s appraisal could become a problem, make sure you don't include a
clause in your sale’s contract which states "subject to appraisal."
How to Avoid Low Appraisals
* Hire your own appraiser
before the sale. Then ask your buyer’s or lender’s appraiser to
review your appraisal.
* Retain the option to approve your
buyer’s mortgage lender. Make sure that the buyer doesn't use a lender
with a history of deliberately underestimating property values. A good real
estate agent should know which lenders routinely under value homes.
*
Keep records of repairs and upgrades, including costs. Take "before" and
"after" photographs. Create an organized journal with a listing of expenses and
include pictures to show to the appraiser during the appraisal appointment.
Stage your home for the appraiser like you do for buyers.
* Secure
your own property comparables to make sure the appraiser uses complete
information. Call real estate agents with homes in escrow and get the sales
prices. Make a list of these properties with the agent’s phone numbers and
give it to the appraiser.
What to Do When Your Selling Appraisal
Comes in Too Low:
* Ask for another appraisal.
* Protest
the appraisal with documentation of your upgraded expenses.
* Have the
buyers make a larger down payment.
When you sell or buy real estate,
remember that the certified appraisal is just one person’s opinion of the
value of your home. The opinion that counts for you is the buyer’s: you
want to be sure the buyer values your home above all others.
Copyright
(c) 2005 Jeanette Fisher, All rights reserved.
Jeanette Fisher, author of Sell Your Home for Top
Dollar--FAST, Staging Houses for Top-Dollar Sales, Doghouse to Dollhouse for
Dollars: Using Design Psychology to Increase Real Estate Profits, and other
real estate and interior design books, teaches Design Psychology and real
estate investing seminars. For information on Design Psychology, visit:
designpsych.com/. For
help selling houses, articles, and home staging tips, see
www.sellfast.info/.
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