Wednesday, February 4, 2009

I have issues...appraisal issues, that is...

With bank owned and short sale property listings being the rule now, rather than the exception, those listings have quickly become the yardstick by which other non-bank owned and non-short sale properties are measured. Ugh.

Case in point...I have a perfectly gorgeous listing in a foreclosure/short sale-prone area, where no expense was spared with upgrades and attention to detail. I listed the property and within days had multiple showings, and in turn, multiple offers. So, we negotiate and the seller accepts one of the offers, escrow is opened, inspections performed, and things are truckin' right along....until the appraisal. For those of you who don't know, the appraisal is an unbiased estimate of value by a state licensed Appraiser, and is the report what the buyer's lender uses to measure the value of the house for lending purposes.

Literally ALL of the recent comparable sales are inferior properties - unlandscaped, dirty carpet, needs to be repainted, has the standard white tile/oak cabinets...not apples to apples to my listing at all, however, they are the new yardstick for making adjustments up or down to the value of my listing.

So the appraisal came back today $15k under our contract price. Ouch.

Well...the good news is that I just finished pouring through every detail of the appraisal report, and found a few CRITICAL errors. The most notable (and easiest to explain) is that the appraisal report shows my listing as a 4 bedroom home, when it is actually a 5 bedroom home...the outline of the floorplan shows 5 bedrooms (and there ARE 5 bedrooms), but the appraiser made an error when doing the side-by-side analysis. This resulted in a negative adjustment of $5k across the with any luck, we can get the report revised.

Anyway - the moral of the story is just because you have a gorgeous home, your upgrades and improvements do not necessarily translate into big bucks on your appraisal. I wrote a blog post about this a couple weeks ago...

No comments: