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.

You’ve been approved for a Florida home loan. You’ve even found the house of your dreams. Now, you or your Florida mortgage broker have hired an appraiser to price that piece of property.

There’s just one problem: the home has been appraised for less than the purchase price; now the transaction can is in jeopardy. Be aware, however, that a low appraisal won’t necessarily stand in the way of the lender granting the loan … as long the borrower is making a large cash down payment.

Inside this Florida mortgage conundrum

For example, let’s say you agree to pay $1 million for a property - and you have $300,000 for a down payment. The appraiser puts a $950,000 value on the property, which is less than you’ve agreed to pay. You’re a well-qualified buyer, however, so the lender is willing to give you a Florida mortgage loan for 80 percent of the appraised value ($760,000, in this case).

With a $300,000 cash down payment, you only need a $700,000 mortgage. Therefore, the sale can proceed, unless you have a problem buying a property that appraised for less than you agreed to pay.

Of course, buyers would prefer to have the property they’re buying appraised for the purchase price. But in some cases a house fits the buyers’ needs so perfectly that a low appraisal is irrelevant to them as long as they have the cash to close the sale.

Here’s where a problem can arise …

What if a borrower doesn’t have the additional cash to put down to make up the difference between the appraised value and the purchase price? This often takes place when buyers are making a low cash down payment or are putting no cash down at all, such is the case with a no-money-down Florida mortgage.

What can you do in this situation? One possibility is to ask for a second appraisal. Make sure, of course, you insist on an appraiser who is experienced and knowledgeable in the area where the property is located.

Another option is to ask the sellers to renegotiate the purchase price. Although no seller wants to accept less than the negotiated price, this option may work if the seller’s prospects of getting a higher price are slim.

You may be able to ask for less, in this case, on your Florida home loan, while also agreeing on a lower offer. It may be the best thing to ever happen to your house buying process!

Rising rates and higher Florida mortgage bills aren’t the only costs afflicting Sunshine State residents these days. Janet and Allen Jurkowski have waited more than two years for their home to be built just north of County Line Road in St. Petersburg, Fla.

The retirees from Long Island, N.Y. endured cost overruns, the bankruptcy filing of their home builder and disagreements with the county Development Department. Then, a week ago, another blow: They received notice from the Property Appraiser’s Office that their half-acre lot had been valued at $71,084, meaning they can expect $1,408 in real estate taxes this year.

The appraisal on the lot is more than twice that of last year, $28,060, and four times higher than the assessed value in 2004 — $17,771.

“We weren’t looking to make money on an investment. We were looking for a home. Now, the property tax has quadrupled. It’s ludicrous,” said Janet Jurkowski, 54.

She mentioned investors because she blames them for the skyrocketing value of lots in Spring Hill. And she is at least partially right, says County Property Appraiser Alvin Mazourek. Upon receiving their notice of proposed taxes in the mail recently, county landowners have flooded the appraiser’s office with questions and complaints — most of them not positive.

Florida real estate values have universally skyrocketed, and property in Hernando County has been no exception, increasing more than 30 percent since year. The value of the average house jumped 24 percent, while vacant lots climbed by 90 percent, probably because lots attract more investors looking to resell them for a profit.

Another indication of speculation: 2,034 lots in the county were sold more than one time in 2005, compared with 336 lots so far in 2006. Nearby Pasco County has seen similar run-ups in price, and the increased home loan, insurance and local tax costs combined are starting to take their toll on homeowners.

Also, owners of lots feel the sting of increased appraisals more than a typical homeowner because they are not protected by the 1992 Save Our Homes state constitutional amendment, which limits the annual increase in the assessed value of a homestead property to 3 percent or a figure equal to the Consumer Price Index (CPI), whichever is less. If a person doesn’t qualify for the exemption, their taxes will rise proportionately to the home prices.

When struggling to make Florida mortgage loan payments as is, these costs can be troubling, to say the least. While prices for lots and homes have fallen in the past year, owners haven’t seen significant relief yet.

As Florida home sales drop slightly, even in strong markets such as Orlando, what’s a seller to do? How can you be assured that your property does not remain untouched for too long, while guaranteeing a final price well above the actul value?

A appraisal if often recommended.

Because the residential Florida real estate market started to cool in 2005, it’s important to price your home correctly in order to lure in potential buyers. Therfore, a second opinion can be needed on top of the real estate agent’s view of what your house is worth.

Appraiser will relate to the buyer

An appraisal will look at the home from a visual standpoint, taking into account considerations from the proximity to schools to cracking or flaking paint; all the factors someone thinking about a Florida home loan would analyze.

The appraisal also will analyze the health of the local housing market, providing owners with more personalized expectations for selling their home. So, what do you need to know about these helpful options? Here are five tidbits of appraisal insight, courtesy of the American Society of Appraisers:

1. What the appraisal report includes: Your appraisal - which could range in length from two or three pages to more than a hundred, depending on its scope - will include details about the house, a description of the neighborhood and side-by-side comparisons of similar properties. It will also contain an evaluation of the area’s real estate market, notations of major problems with the property that will affect its value and an estimate of the expected time it will take to sell the property.

2. How an appraisal report is developed: Appraisals are opinions of value, and residential real estate appraisals compare your home with similar homes that have sold; the goal is to find Fair Market Value. Remember, an appraisal is NOT the same as a home inspection. Inspections look for physical imperfections in the home, making sure it is structurally sound and so forth.

3. How to get a copy of your appraisal: You paid for an appraisal when you bought your house. If you didn’t request a copy of the appraisal at the time, you can request it from your Florida home loan lender - it’s your right under federal law.

4. What to look for in the report before you sell: Focus on items that had a negative adjustment - they might be a good checklist for elements to update or remodel in order to attract higher Florida mortgage loan offers. Examples of issues that could cause a negative adjustment: less than the typical number of baths for the house’s size, outdated kitchens and baths, or a one-car garage or no garage in a neighborhood where two- and three-car garages are standard.

5. Why an appraisal before your home hits the market might be wise: The fresh appraisal will help accurately price the housee and ensure it will eventually appraise for your asking price at the time of the sale. Sellers are sometimes shocked when their house appraises below the asking price, which could cause a deal to fall through or for the seller to be forced to reduce the home’s price.

The goal is to not over-shoot the value of your property; you’d never receive bids for those seeking Florida home loans in that case. You need to focus on making a profit, while also coming across as fair to all buyers.

Are you buying a house? Looking to secure a reasonable Florida home loan? No matter which side of the real estate equation you’re on, an appraisal offers value. But how can you be assured of an accurate one? Expert Bob Bruss offers the following tips in the best ways to understand true market value …

1.) GET THE HOME INTO TIP-TOP CONDITION. If you are buying a house or condo, the seller has presumably made the residence look its best. However, if you own the home and need an appraisal for Florida home loan refinancing or other purposess, aim to put the home into its best “model home” condition before the appraiser arrives.

Because appraisers often inspect three or more houses each day, and can’t possibly remember each home’s special features, it is best to hand the appraiser a list of the residence’s special features, especially those that add market value. Also, if you know of recent nearby home prices, be sure to hand that information to the appraiser.

2.) ALWAYS ACCOMPANY THE APPRAISER. Either the real estate agent or the homeowner should always accompany the appraiser to facilitate the inspection and answer the appraiser’s questions. Be sure to point out the home’s special features and benefits that the appraiser might miss during the inspection.

3.) INSIST THE LENDER WILL PROMPTLY PROVIDE THE BORROWER WITH A COPY OF THE APPRAISAL. Technically, the appraisal belongs to the Florida home loan lender who hired the appraiser, even when the homeowner or home buyer is paying for the appraisal.

Borrowers should insist their lender agrees to promptly provide the borrower with a copy of the appraisal. If the appraisal comes in low, the home buyer, realty agent, and homeowner should have immediate access to that appraisal to correct any errors.

So there you have it. Issues such as when to close on your Florida home loan, and what sort of price the appraiser places on property, go a long way toward deciding the final costs to the buyer.

Neil Mohamed Husani shook up the Southwest Florida real estate market when he got a $16.25 million loan from Fifth Third Bank — on property whose value apparently more than doubled in a day. It appears the appraisal that Husani and his partners used to get financing for the proposed site of a $125 million development contains “misleading information,” according to two experts who reviewed the document for the Sarasota Herald-Tribune.

A deed filed this month by Husani on another deal overstated the purchase price of some Manatee County property by 250 percent and was used by one of his partners to get a $4.06 million loan from First State Bank in Sarasota. It’s not clear who provided the erroneous information in either case.

Regardless, filing incorrect or misleading information in an appraisal and using it to obtain a commercial real estate loan could constitute fraud and subject both the appraiser and the borrower to civil lawsuits and criminal charges. Overstating the price of property is not a crime in and of itself, but if part of a scheme to defraud a bank, it is considered illegal.

One of Husani’s partners, Robert J. Martin, said he played no part in the appraisal process on the Sarasota condo project and has never seen the document prepared for Fifth Third Bank. He also said he had no idea that Husani had overstated the value of the Manatee County ranch land. Another of Husani’s partners, Michael Tringali, also said he did nothing wrong.

Since January 2005, Tringali has participated in five multi-million dollar deals with Husani, including the Sarasota condo project. In those five deals, Husani bought 1,864 acres of land for $34 million, then sold it to limited liability companies involving Tringali for $96 million. Those companies then accumulated nearly $71 million in bank loans.

Several of the deals were involved the same appraiser, Julian Stokes of Integra Realty Resources-Southwest Florida, who stands by the validity of his appraisals. If he was wrong, Stokes says, it was because he was deliberately deceived. In the meantime, questions about Stokes’s appraisal and the resulting loan have impacted Florida commercial real estate.

It will be interesting to see how this situation is resolved. Are the questions raised simply due to miscommunications, or is this yet another case of reckless development and fraud? Florida Home Loan has faith in the judicial system and believes that people are innocent until proven guilty, but it’s clear that the state and federal government both need stronger commercial loan regulations if they want instances like this to stop happening.

David P. Bouverat has been active in Sarasota real estate since 1972 as an agent and also a state certified residential appraiser.

In 1992, he opened a brokerage firm and went on to achieve the Accredited Buyer Representative designation, a benchmark of excellence in buyer representation. It is awarded to practitioners by the National Association of Realtors after the recipient meets specified educational and practical experience criteria. Bouverat’s company, David P. Bouverat, Inc., and website keep him in the mix of the Southwest Florida housing market.

But in the face of a slowing market with few buyers and an increasingly long list of would-be sellers, Bouverat has been forced to rethink his business model of representing only buyers. He has been accepting side assignments for sellers as well, many former buyers he represented.
Stephen Frater of the Sarasota Herald-Tribune caught up with Bouverat recently and his interview is detailed below.

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HERALD-TRIBUNE: The headline in your ad in the 2006 New Homes edition of Homes and Land of Sarasota read “I don’t sell Real Estate, I help you buy it.” Can you please explain your business model and how it has changed recently?

BOUVERAT: My approach to working with a real estate client has always been one of a consultant as opposed to a sales person. Part of my professional training as an appraiser is that of a consultant. My objective is to find the best property for my client at the best price.

HERALD-TRIBUNE: Please describe your marketing strategy to attract buyers.

BOUVERAT: I like to point out to buyers the difference between a transaction broker (one who represents both the buyer and seller in the transaction) and a single agent (one who only represents one party in the transaction, such as the buyer in this case).

Both types of agents have what Florida real estate law defines as duties to their client. A single agent has the duties of confidentiality and loyalty, whereas, the transaction broker has limited confidentiality and not loyalty. Who would you rather have represent you when buying real estate?

HERALD-TRIBUNE: Please describe your fee structure.

BOUVERAT: My compensation as a buyer’s broker is no different than that of a transaction broker. Typically, the commission on the sale of real estate listed in MLS is split between the listing agent and the selling agent.

HERALD-TRIBUNE: Is an appraisal part of the deal? If not, what is the cost of that service?

BOUVERAT: Although I am a state-certified residential real estate appraiser, I do not perform an appraisal on a property that I am involved as an agent on. To do so would be a violation of USPAP (Uniform Standards of Professional Appraisal Practice). As a real estate broker, I do discuss comparable sales data with my client and help them form their own opinion of the property’s value. USPAP does not allow appraisal fees to be contingent on a property’s value.

HERALD-TRIBUNE: Are buyers asked to commit to any agreement to have your assistance?

BOUVERAT: I do ask my clients to sign an agreement. I make a commitment to my buyers and ask them to do the same to me. The agreement allows my clients to cancel the agreement if they are not satisfied with me or have a change of plans. I am happy to say that I have never had a client cancel because of dissatisfaction.

HERALD-TRIBUNE: How large is your operation in terms of human resources?

BOUVERAT: I purposely have a small operation in order to give my full attention to clients. My team includes a full-time assistant and an associate appraiser.

HERALD-TRIBUNE: During the height of the South Florida real estate boom, how many buyers did you represent at any one time?

BOUVERAT: An average of six serious clients in various stages of the process.

HERALD-TRIBUNE: What is the average price point of your buyers for residential properties?

BOUVERAT: The average is around $600,000.

HERALD-TRIBUNE: In dollar volume, how many transactions did you close in 2003, 2004, 2005 ?

BOUVERAT: It is my policy not to disclose confidential information; however, I can tell you that the volume of buyers is down since last fall.

HERALD-TRIBUNE: How is 2006 looking so far with the explosion of listed properties?

BOUVERAT: Well, the tables have certainly turned from a seller’s market to a buyer’s market.

HERALD-TRIBUNE: Does the buyer’s market make your job more difficult?

BOUVERAT: As a buyer’s broker, the high inventory actually makes my job easier because I have options for my buyers, and there is more possibility in negotiating the price. In a seller’s market, it was more difficult because there often was little to choose from, and the price was almost never negotiable.

For a listing agent, this market is tough. It requires much more time and expense devoted to marketing a listing. As an appraiser, both the previous “seller’s” market and the current market have been difficult to work in. It was hard to support values in a rapidly appreciating market, and now it is difficult to find recent comparable sales data for an appraisal.

HERALD-TRIBUNE: Since you have focused on the buy side for so long, is this a challenge for your operation?

BOUVERAT: Taking listings in this market is challenging. I am doing it primarily because former buyer clients have asked me to help them sell their property. I think my expertise as an appraiser comes into play here. A property has to be realistically priced to sell in this market.

HERALD-TRIBUNE: Are there other “buy side” real estate agents you are aware of?

BOUVERAT: There are other buyer’s brokers in this area; however, I really don’t know what their approach will be in a market with so few buyers.

While not as strong as the last five years, the housing market is stable. Nevertheless, sellers may be wondering what to do if price reductions become routine because home inventory begins to outweigh Florida home loan demand.

For most individuals, the ultimate answer about value will come from the appraiser hired by the purchaser’s mortgage lender.

What do appraisers see in the shifting sands of real estate for 2006? And what advice do they offer sellers, buyers and realty agents?

The following is a sampling from a series of late-December interviews conducted with veteran appraisers around the country. They offer practical insights for the early months of the new year.

Learn about your real esate market

Know your market sub-segment - the general price band or location of your property. Frank Gregoire, vice chairman of the Florida Real Estate Appraisal Board and an appraiser in the St. Petersburg-Tampa area, said a cyclical slowdown is well underway in the middle- and upper-price brackets of the Florida west coast, for example, but not in the lower-cost, entry-level segments of $250,000.

To stay in touch with multiple sub-segments, Gregoire not only studies realty industry data on recently closed sales and the time they were on the market, but he also talks to realty agents who are grass-roots experts in specific areas and price segments.

Agents are on the front lines, they are in daily touch with sellers and buyers, and “they really have a very good grasp of where things are heading,” he said.

That specific information gets factored into the total appraisal process, offering a better perspective on sales price variations in “comparables” he selects for a home appraisal.

Hey, prospective buyers/sellers: Hire your own apprasier!

Another piece of advice from Gregoire: If in doubt about pricing, hire a licensed, long-established appraiser as a consultant for an hourly fee. Though most appraisers work on contract for lenders, they are not prohibited from working as consultants directly for consumers, either as the source of a second opinion or to nail down a listing price.

Appraiser Tom Berge, of the Alhambra-based Berge Co., noted that although many Southern California sellers are apparently unaware of it, there is currently “just about zero inflation” in some segments of the residential real estate market, with the exception of the low end.

That reality is a shock to some sellers and lenders, Berge said, “but as an appraiser I have no choice, I have to go with the comps.”

Berge said he ignores pressure by lenders or realty agents to “hit the number” on the sales contract. But he points out a way - ethically and legally - for sellers, buyers, lenders or realty agents who think an appraisal is low to influence the final result:

“If you want me to adjust [the number], go out and get me better comps,” he says, for similar properties that closed recently in the same vicinity, with the same size lot, amenities, etc., but that carry a higher price.

Be realistic about the Florida housing market

Chris Call of AREAS Appraisers Inc. of Springfield, Va., has this three-word piece of wisdom for sellers and buyers in softening markets: Just be realistic. Don’t be greedy as a seller, unless you want to sit dead in the water for months without an offer.

As a buyer, don’t expect sellers to bleed for you. Generally they won’t sell for less unless they absolutely have to. Read through our guide about how to make a Florida home loan offer for more information on how to receive the best deal.

With housing inventory rising, Florida mortgage rates inching higher and price reductions in local real estate listings become routine, it’s becoming harder and harder to say what a home is really worth. In the Florida real estate market, as well as in California, New England and other areas observing sagging sales, this problem is becoming common. The answer may lie with a person rarely seen in the home-buying process — the lender’s hired appraiser.

Kenneth Harney of the online Realty Times discusses the increasingly important role of this individual. An appraisal can be a deal-breaker on both ends of the spectrum. With the national market finally showing some signs of cooling, many sellers are being presented with the bad news that their home is worth A LOT less than it was as recently a few months ago. For buyers, an appraisal lower than the contract price could spell disaster as the bank will then demand a larger down payment.

How do appraisers see things shaping up in the months to come? The following pieces of advice for buyers and sellers may help…

First and foremost, know your market. It sounds obvious, but it’s more and more difficult. Specifically, the goal is to stay on top of your “market sub-market.” Having an idea of what a property is going for in your local niche is imperative. For example, a market slowdown is well underway in middle- and upper-price tiers of the state’s west coast, but not in the entry-level bracket of $250,000 and below.

“It is very important for me to have a lot of input from [agents] I know who specialize. [Agents] really have a very good grasp of where things are heading,” says Frank Gregoire of the Florida Real Estate Appraisal Board.

He notes that because they are on the front lines, the realty agents are the grass-roots experts in specific areas. Talking to them frequently as well as studying industry data is the best way to fully understand the process. Figures can be inflated by exceptional circumstances, such as a messy divorce or an unusual situation in which both sides wanted to get the deal done fast. This information is what the local experts will know, and will be factored into the appraisal process, lending perspective to the “comps” (or comparable sales) in a particular area.

Gregoire suggests that if you are in doubt about pricing, hire a long established, licensed Florida real estate appraiser for an hourly fee. The benefits are well worth the cost.

Another interesting point comes courtesy of Tom Berge, head of an appraisal company in Orange County, Calif., who says that there is just about “zero inflation” in many sections of the residential real estate market. Much as sellers don’t want to hear it, when the most recent comparable sales prices are lower than earlier-sold comps selected for the appraisal, that’s always a telling sign. Prices are headed south.

Chris Call of AREAS Appraisers, Inc., a Virginia firm, echoes this sentiment and urges sellers to be realistic. With markets softening to a large degree, you don’t want to get greedy and then go months without drawing an offer. Prices really do shift quickly, and what your neighbor got for his house six months ago may be irrelevant now. From the buyer’s perspective, understand the extent of your leverage, but don’t expect the seller to bend over backwards for you.

While the days of 20 percent annual appreciation may be over, if both sides can temper their expectations, and Florida home loan rates remain under 7 percent this year, it should be another healthy year for the market overall. Happy hunting!