5 Things You Can Do When Your Louisville Home Doesn't Appraise
What do you do when you get the phone call only weeks before you’re closing that the home doesn’t appraise for the contract price?
You are not alone as 16% of real estate agents reported that their sale fell through due to a low appraisal.
You have options and you can fight back!
Appraisals in Louisville are based on recent sales in your area. Over the past couple of years this has been challenging because values rose quickly during the boom and fell just as fast during the bust. . The deals that Buyers have received with foreclosures and short sales have created dual pricing between normal sales and distressed sales.
Appraisals are not to protect the Buyer or the Seller, but to protect the lender should the Buyer default on the loan. The lender wants to make sure that they are making a worthy investment. They want to know that if the Buyer defaults they can sell the home for what is owed. Due to the huge losses banks have taken on foreclosures in the past years, they are not taking any risks. They care more about protecting themselves from a bad investment than giving a Buyer a loan.
So what can you do to protect yourself from having your entire home packed up a ready to move only to find out you have to unpack everything?
1. Sellers get an appraisal before you list your Louisville home for sale.
Unless you are listing your home with an experienced real estate group like www.MilesSmithGroup.com, you should consider asking a licensed appraiser to determine value. This is also a huge selling point that you can advertise to any potential Buyers. Buyers are very leery of pricing on homes and always want a deal. An appraisal will deter any low-ball offers on your home. Estimated cost of an independent appraisal is $350-$500
2. Fight the appraisal.
If you listed with a great real estate group like www.MilesSmithGroup.com in Louisville, than your Realtor will have comps already compiled that they used to determine your list price. With the support of your Realtor the appraisal can be fought and the value change We see poor appraisals all the time where the bedrooms, sqft etc are incorrect. Your Realtor will be able to view the appraisal and identify the errors.
3. Ask your lender to order a new appraisal.
This will cost you additional money but if your Realtor has proper comps that show your home value is more, than it is worth the extra $400. VA appraisals due remain with the case number so this is not an option but Conventional and FHA loans are different. Your loan officer will be able to advise you on if this is an option or not.
4. Ask the Seller to come down off of the contract price.
After all other efforts have been made and everyone is in agreement that the appraisal is accurate. The Seller will have to come down to the appraised value. In a few occasions the Buyer is willing to pay the difference. These few occasions are normally due to a high in demand property where there were multiple offers etc.
5. Null and void the contract.
If the Seller is not willing to reduce the price to the appraised value and the property isn’t high in demand and worth the Buyer paying the difference, then everyone has to null and void the contract
Sellers, as you can see listing your Louisville home at an accurate price is very important. If the home will not appraise, you have wasted your time and money on fixing the home up, keeping it clean, showing the home, going through inspections, making repairs, possibly buying another home, and then packing only to find out 1 to 2 weeks before closing that the Buyer is walking away from the deal.
Buyers, make sure you have a great Buyers agent like someone on www.MilesSmithGroup.com. If your Buyers agent does not pull comps because they are just anxious to get your signature on a contract, you could spend up to a $1000 on home inspections, termite inspections, radon inspections and an appraisal. The stress of negotiating price, repairs and packing will all be wasted when you find out 1-2 weeks before closing, you cannot buy the house.
Let us help you through the hurdles of this Louisville real estate market. Call us today 554-9499.
