Here in the Napa Valley, we are fortunate to have a very healthy real estate market. By healthy, I mean stable and given the limited supply of homes for sale, a very active one in certain price ranges. As prices have increased over the past year, the median from 2011 to 2012 is up nearly 9 percent, many agents here have become very involved in the appraisals and often provide comparable sales data to insure the appraisal and the sale price are the same.
Given the heating up of the real estate market and prices continue to recover, more home buyers and sellers are likely to encounter the problem of an appraisal that is lower than the agreed-upon sale price.
I often see comments that somewhere between a third and one fifth of all homes sold do not appraise. Here, I feel it is less than this but it does occur too often. Here are a few hints which may help if it happens to you.
- Appraisals must be based on recently settled transactions, and in a rising market those past transactions are likely to be lower in price. Whether a buyer or seller, it’s important to understand the risks involved around low appraisals – and the options available.
- Because of new restrictions on the relationship between lenders and appraiser – aimed at curbing the appraisal abuse that contributed to the housing bubble – buyers and their mortgage representatives have less control over the process. Lenders simply order an appraisal from a list of approved appraisal companies, and a third party directs the individual to perform the appraisal.
- Resulting from the third-party rules, the appraiser who is assigning a value to the home may not be from the immediate area. It can help to inform the appraiser of the quality of the school district or the amenities in the local neighborhood, as well as improvements to the property as compared with other recent sales in the area.
- One appraiser recommends sellers prepare a package of information on the home, including data on comparable houses and any improvements that have been made that should influence the value of the home.
If I can help you find the perfect Napa Valley property, please email me