Could the Appraiser Shortage Effect Your Sale Price?
DO LOW INVENTORY LEVELS AFFECT APPRAISAL OUTCOMES?
Low supply, high demand – a seller’s dream right? Or could it possibly be a seller’s nightmare? With inventories ebbing on the low side for such a long time, buyers are offering higher prices in hopes of securing their dream home. But what happens when the appraiser returns value based on much lower past sales that drag your appraised value DOWN?
Both seller and buyer are finding themselves caught in a maelstrom of appraisal turmoil right now, and it isn’t just low appraisals coming in on sales. SLOOOW appraisal turnaround is having some adverse effects as well. New industry regulations have not exactly inspired a horde to pursue Appraiser licenses, and the industry as a whole is feeling the pinch.
The result in some cases is elevated stress levels and sellers who have given up on the idea of moving.
David Crowe, Chief Economist for National Association of Home Builders put it this way, “Many sellers may not have an absolute decision as to whether to buy an existing home or a new home. So the low inventory of existing homes is locking them in place.”
That lock down contributes to the low inventory levels month after month, which becomes especially noticeable as we move into what is historically the “busy season” in real estate sales.
According to Lawrence Yun, the Chief Economist for NAR, “First-time buyers in high demand areas continue to encounter instances where their offer is trumped by cash buyers and investors. Without a much-needed boost in new and existing-homes for sale in their price range, their path to homeownership will remain an uphill climb.”
A BAD TIME TO FSBO
It’s a proverbial rock and a hard place combined with a Catch-22 creating a log jam that requires some tricky maneuvering to work around. This alone creates a situation where expert representation takes on an ever more necessary role in the market. While a FSBO has never been quite the quick and easy solution it is sometimes portrayed as, in this particular type of marketplace, the challenge grows ever more, well, challenging!
Throw into the mix a dearth of quality appraisers causing time delays along with low appraisal opinions being rendered and you can imagine the unhealthy stress levels creeping even higher.
There are solutions and the best bet for both buyer and seller remains representation by a professional familiar with the locale and the market changes occurring.
DON’T BE AFRAID TO QUESTION A LOW APPRAISAL
Working with a professional who isn’t going to leave your appraisal to chance right from the get go and who has the knowledge and skill set to competently review and rebut low appraisals is your best defense.
A local agent has access to market data for reviewing all comparables, and will take into consideration more than square footage and lot size. They’ll make certain things like neighborhood amenities, school ratings, home improvements done and if they were accomplished with proper permits or not are part of the valuation process. They can also dig into upgrades done to determine if they were of similar quality materials to your updates.
Most importantly, they know how to approach the appraisers and the bank if necessary, to ask for a reconsideration of opinion, because in the end, the appraisal is an opinion, so PERSUASION devoid of emotional attachment is a powerful tool at this point in the sale.
· BUYER- you do have some say about who your lender uses – request a local appraiser who is more likely familiar with the real estate industry trends and changes in your local buying area
· SELLER – absolutely have your agent meet the appraiser and be helpful by providing data about distressed sales that may affect your price, along with highlights about your homes special features, comps they used to price the house and any other materially relevant information, such as changes in the general market
Last but not least, you can request a second opinion. This isn’t your best solution, as it may leave you with no room for reconsideration, but if it’s the only possible solution, be ready to pay for that new appraisal only after getting lender approval!
If you’ve been thinking of selling, but were concerned about these market conditions, rest assured that your RE/MAX Alliance Associate has the tools and resources you’ll need to price right, sell fast and realize the full market value of your home.