Every homeowner thinks the property they're selling is special and should be worth more than similar neighboring properties. Every buyer wants to be able to get their next home at a bargain
Appraisals Math Vs Magic
Every homeowner thinks the property they're selling is special and should be worth more than similar neighboring properties. Every buyer wants to be able to get their next home at a bargain price. The banks however, are much more rational and will hire an appraiser to determine what a realistic market value of the property should be.
During a listing appointment, a great test of your real estate agent is to ask them what they would list the home for, and then how they came up with that price. If the answer to that question is I used the Zillow Estimate (or Zestimate) you probably should end the conversation right there and thank them for their time. A real estate professional will review recent sales in the neighborhood, and how they are better or worse than your property. Ideally they will bring 3-4 recent sales and tell you how similar (or not) those were to the property.
Similarly, when a buyer is considering making an offer, their agent should review the recent sales with their client. Depending on how the situation, they may suggest going in high (if there's a bidding war for example) or low (if they think the list price is too high). Keep in mind the seller may counter the initial offer price, so both recommended offer price and final price should be discussed at this time.
If these steps have been followed, when the actual appraisal happens there should be a minimum of drama. I always prepare an appraiser "packet" for my sellers. This contains MLS print outs of the recent sales, and handwritten notes of why I think the property is better or worse than the subject. I also include information regarding recent upgrades to the property, and evidence if there was a bidding war of the other offers. While all I can do is make this packet available to the appraiser, I find it is a major help in ensuring that the property appraises at the contract price.
Have you ever had a low appraisal? Were you able to close your deal?
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