Here in the Napa Valley, competition for many of the homes for sale here has been so heated, approximately half of the homes for sale are receiving multiple offers, the final accepted price is rising faster than appraisers can keep up with. This last weekend, three new listings in my company priced at $299,000, $329,000 and $395,000 received 22, 21 and 20 offers. All three sold substantially over the listed price. Now comes the fun part, getting them to appraise for the new buyer’s loan.
Appraisers are aware of what is happening in this market but they still need to be able to justify the sales price. Fortunately, about one third of these sales are all cash so there are some comparables out there. But quite often not enough for appraisers need at least three recent solds and sometimes as many as five for a lender to approve the new buyer’s loan. The following are some of the steps an agent and home seller can do to help with this process.
- Home appraisals are based on recent sales prices of comparable properties. And in rising price markets, those sales prices might not be high enough to support new home sale prices. Here are some ways sellers can improve their home appraisal.
- Make sure the appraiser knows the neighborhood. Sellers can request that the lender send a local appraiser; if that still doesn’t happen, owners should supply as much information as possible about the quality of the neighborhood.
- Provide your own comparables. Sellers should provide the appraiser with at least three solid and well-priced comparable properties. This will save the appraiser some work, and ensure that he or she is getting price information from homes that really are similar to the one being appraised.
- Document home improvement projects. Sellers should provide before and after photos, along with a well-defined spreadsheet of what was spent on each renovation, which should persuade an appraiser to turn in a number that far exceeds what he or she first called out. It’s important to highlight all-important structural improvements to electrical systems, heating and cooling systems – which are harder to see, but can dramatically boost an appraisal. Showing receipts also may be helpful.
If I can help you find the perfect Napa Valley property, please contact me