Low appraisals have become an issue this spring, particularly in the condominium market, where prices are rising rapidly. A low appraisal can potentially sidetrack a transaction, resulting in either a negotiated price reduction or even a canceled offer.
Fortunately there are a few things you can do to protect your listing from appraisal issues. Below are 7 ways you and your real estate agent can work together to prevent a bad appraisal from derailing your listing.
7 Ways to Protect your Listing from a Low Appraisal
Choose a listing plan that's designed to attract multiple offers. Your odds of receiving a cash offer with no appraisal contingency go up significantly when buyers compete against each other for your listing. When you interview listings agents, ask each agent what they will do to attract a cash offer. Hire the agent who has the best plan for bringing the most competing offers to the table.
If you don't receive a cash offer, go with the buyer who is willing to put at least 25% down and waive the appraisal contingency. Even if the appraisal comes in low, your offer will likely stay together without any negotiated price reduction.
Select a buyer who is financing with a reputable local lender. Based on our experience, bad appraisals happen more often when buyers use certain out-of-town, internet, or big box lenders. Buyers with local financing tend to have fewer appraisal issues.
On the day of the appraisal, stage your home. Appraisers form first impressions just like buyers do, so on the day of the appraisal your home should be staged as if you were holding an open house. Follow your professional staging plan to the letter. Make sure your home is squeaky clean. Turn on all of the lights, and open all of the blinds to create a positive impression.
Document your home's features and improvements and make this information available to the appraiser. Educate the appraiser on all of the upgrades you've added to your home.
Attend the appraisal. As the homeowner, you're allowed to be present during the appraisal. The appraiser will have questions that you can easily answer. You can also use this as an opportunity to point out some of your home's features and upgrades that might otherwise go unnoticed.
Share other pertinent information that will support your contract price. For example, if your listing received multiple offers, this is great information to share with the appraiser. Your listing agent can reach out to the appraiser with this information.
These strategies work. As of this post we have over 20 listings sold or under contract in 2017. Every one of these listings has appraised out at the accepted offer price.
Please note every listing is unique. In no way should this article be treated as legal advice or as a substitute for the advice you should be seeking from your attorney or listing agent.
This article is published courtesy of: Dan Miller, REALTOR Mad City Dream Homes & RE/MAX Preferred