Before You Sell or Buy: Questions to Ensure a Fair Appraisal
If you’re a home buyer, you want to pay a fair price for a piece of property. If you’re a seller, you want to get the most you can. Each of these parties relies on an appraiser to get the home’s value right.
In the current, slow Florida housing market, however, the job of these professionals is more difficult; there’s simply less data (i.e. fewer houses sold to compare others to) available. With this in mind, consider asking the following questions before you make that purchase or sale official:
Does the stated home value seem reasonable, given what you know about the neighborhood?
“The first red flag is, does this value seem reasonable,” said Don Kelly, a spokesman for the Appraisal Institute. “If it seems high, that could be a problem.”
Still, keep the local market in mind, said Alan Hummel, past president of the Appraisal Institute, a membership association which provides education and certification programs. warned. A first-time homeowner seeking his or her first Florida home mortgage, is probably not used to seeing a slowing market.
“To be told that the property you bought two years ago is now worth something less, obviously they look at the appraiser and say you must be nuts,” he said. Don’t forget that “real estate is a commodity that … goes through cycles.”
When the appraiser cites comparable home sales, is he focusing on nearby houses?
“The homeowner looks and says, ‘Wait. These comparable sales are six, eight, 10 miles away,” Kelly said. “You want to find out why. There might be a reason but that’s a red flag.”
Also, Hummel said, make sure the homes used in the comparison are in the same school district. If not, ask for the reasons why they were used.
Does the appraisers’ description of the house match what you know?
Does the square footage match your estimates? “Is the room count wrong? That’s a red flag,” Kelly said. The appraisal said “this house has four bedrooms, but it’s only got three, or they say it’s got three baths and it’s only got two.”
Will the lender give you a copy of the appraisal?
You’re entitled to a copy of the appraisal. If your Florida home loan lender doesn’t provide you with this, ask many questions. That’s definitely a concern.
Is the appraiser licensed and/or certified?
Make sure the appraiser is holding a current license or certification, Kelly said. Seems like an obvious point, but it’s often overlooked.
What to do now when appraisals go badly
If you own a home that you think was appraised incorrectly, your next step depends on your situation, Hummel said.
First, “don’t make the assumption that the previous appraisal was bad. There may have been changes in the market,” he said. “Get a qualified appraiser [to find out] what is today’s value.”
Then, “if that first appraisal was so far off that it was fraudulent…you can complain to the lender, because they got a bad appraiser,” he said. You can also complain to the State’s appraisal agency, as well as the Better Business Bureau and the Appraisal Institute if the appraiser is a member. Also, the FBI investigates mortgage fraud now.
Another possible option: Florida home loan refinance.
“Maybe I take my lumps here. Pay some cash, get this thing back on track. Maybe you see that you’ve got an adjustable-rate mortgage coming due next year. You say, ‘Well, we’re going to have to do some adjusting here, but maybe I can work with the lender to make up the difference or do a deal on whatever the negotiated package for financing is. Maybe you can keep your payments so you can make them and live this thing out,” Kelly said.
As you’re probably well aware of, a Florida mortgage loan is too important of an investment to take any step lightly. Make sure you’re well-versed on appraisals and what can go wrong.
