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Jeanette Joy Fisher of Sell Your Home for Top Dollar -- Fast!, invites you to reprint this article in your publication, ezine, or on your website.

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    How to Avoid Appraisal Problems in the Sale of Your Home
    Copyright © 2005, Jeanette Joy Fisher

    Before you sign a contract to sell your home, check to see if 
    the purchase offer depends on financing. Look for a clause 
    witch states that the offer is contingent on your home's 
    appraisal done by the buyer's mortgage lender. This clause 
    causes many home sellers to lose the sale or to lower the 
    sales price later.
    
    Appraisers draw on comparable market sales (comps) of local 
    properties sold within the last six months to value your 
    home. With today’s rapidly rising seller’s market, six-month-
    old information is ancient history. Appraised value does not 
    always equal the true market value, or what the home will 
    sell for on the open market.
    
    Realtors will give you a comparative market analysis, an 
    informal estimate of market value based on comparable sales. 
    Lenders, on the other hand, will use the appraised value to 
    determine a new mortgage amount. Some lenders require that 
    the stated property value covers the mortgage amount plus 
    their selling costs in case of foreclosure. For this reason, 
    a sale may fall through if a home sells on the open market 
    for more than the appraised value, which often happens in 
    bidding wars over hot property.
    
    We learned the importance of securing a sufficiently high 
    appraisal when we sold a rental property in Lake Elsinore, 
    California. We listed the house for $234,700 on Friday. By 
    Monday morning, we had three offers: $245,000, $255,000, and 
    $260,000. We accepted the one for $255,000 because the buyers 
    had $80,000 down, reassuring us that they had sufficient 
    funds.
    
    As usual, the lender sent an appraiser to review the 
    property. This busy appraiser didn't take the time to view 
    all the upgrades we put into the custom-built home. Even 
    worse, he used only comps from the local one-mile radius. 
    Because this home is close to a shopping district, there were 
    not many homes sold in this limited area during the six-month 
    period.
    
    The appraiser used comps six months old; during this time 
    housing costs in Southern California appreciated around 
    thirty percent. Sales from six months previous should have 
    gone up in value by $30,000 on a $200,000 home. This means 
    that our home should have been worth $250,000 to $260,000, 
    especially since buyers are willing to pay this price on the 
    open market. To increase the value of this home, at the time 
    there was not another three bedroom home listed in the area 
    for under $250,000 (excluding manufactured homes). However, 
    the appraiser valued our home for only $230,000 -- and we 
    would have lost the sale if the offer did not include a 
    sufficient down payment.
    
    Because a low appraisal can kill your sale, finding a buyer 
    with a large down payment provides you with a safety net. You 
    may also choose a buyer with strong credit who doesn't have 
    to put a large percentage down. If you think that your home’s 
    appraisal could become a problem, make sure you don't include 
    a clause in your sale’s contract which states "subject to 
    appraisal."
    
    
    How to Avoid Low Appraisals
    
    Hire your own appraiser before the sale. Then ask your 
    buyer’s or lender’s appraiser to review your appraisal. 
    
    Retain the option to approve your buyer’s mortgage lender. 
    Make sure that the buyer doesn't use a lender with a history 
    of deliberately underestimating property values. A good real 
    estate agent should know which lenders routinely under value 
    homes.
    
    Keep records of repairs and upgrades, including costs. 
    Take "before" and "after" photographs. Create an organized 
    journal with a listing of expenses and include pictures to 
    show to the appraiser during the appraisal appointment. Stage 
    your home for the appraiser like you do for buyers.
    
    Secure your own property comparables to make sure the 
    appraiser uses complete information. Call real estate agents 
    with homes in escrow and get the sales prices. Make a list of 
    these properties with the agent’s phone numbers and give it 
    to the appraiser.
    
    
    What to Do When Your Selling Appraisal Comes in Too Low:
    
    1. Ask for another appraisal.
    
    2. Protest the appraisal with documentation of your upgraded 
       expenses.
    
    3. Have the buyers make a larger down payment.
    
    When you sell or buy real estate, remember that the certified 
    appraisal is just one person’s opinion of the value of your 
    home. The opinion that counts for you is the buyer’s: you 
    want to be sure the buyer values your home above all others. 
    



    Writer's Resource Box:
    Jeanette Fisher, author of Sell Your Home for Top Dollar--
    FAST, Staging Houses, Doghouse to Dollhouse for Dollars: 
    Using Design Psychology to Increase Real Estate Profits, and 
    other real estate and interior design books, teaches Design 
    Psychology and real estate investing. For information on 
    Design Psychology, visit: http://designpsych.com/.  
    For help selling houses, articles, and home staging tips, see 
    http://www.sellfast.info/.




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