selling real estate

APPRAISALS…..WHAT ARE THEY GOOD FOR?

Posted on by khaniauerbach

REVEALING THE MYTHS OF THE HOME APPRAISAL

You are so excited because someone finally made an offer on your home and you ACCEPTED! You have been working so hard to sell your place and now, since the contract has been fully executed, you can sit back and relax while the Buyer does their thing. WRONG. You can’t just sit back and relax, just yet. You still have an appraisal to worry about. In most cases, Buyers won’t come to you with a wad of cash and say, “I want to buy your house.” A majority of the residential real estate transactions are financed and the bank, well, they are the Buyer’s partner and as such, they want to make sure they get their full value. So what about that appraisal?

Lenders will often require the use of their own, FHA-approved appraiser. What does that mean for the Seller? Basically this….you have absolutely no say in who determines the financial value of your home. The home you have nurtured, put your entire life savings into and built relationships in.
In this article, I include things that Sellers can do to help them get through this process.

1. THE APPRAISER IS NOT A MAGICIAN
If you think the appraiser can determine the value or worth of your home upon entry, think again. They don’t. Once you have a clear understanding of the appraisal process, you can understand the home’s value determination.
Initially, the appraiser will compile a list of comparable listings in the area where your property is located, what we lovingly refer to in the biz as “comps”. Comps can be someone’s dream come true or possibly a nightmare, depending on how they are compiled. You would hope that the homes being used in the comps are homes similar in location, square footage and style that have been sold within the past few months. After pulling the comps, the appraiser will then do a physical inspection of the home to determine its quality and condition. In an effort to make the most accurate assessment, the appraiser will also take in to account other factors that may affect the home’s value. Keep in mind, this won’t be immediate and could take a few days to complete.

2. STAGING, STAGING, STAGING
If there was ever a reason to clean your house, this is a perfect one. The appraiser is not judging you on cleanliness, but clear away the clutter, clean the floor and do what you can to make the home presentable. More than likely, your home won’t be devalued due to a mess, but staging (organizing and decluttering) may help. Be sure the occupants of the home are prepared when the appraiser shows up. This includes the reclusive teen’s room.

3. PREP YOUR PAPERS
Beat the appraiser to the punch and send any information you have about the house to the appraiser BEFORE they arrive. The lender or broker may ask for this information, but be prepared.
Prepare a list of major improvements (with their permits attached), detailed information about the condition and age of the roof, plumbing, air conditioning and major appliances. Appraisers do not appreciate surprises and if they see an improvement that hasn’t been supported by documentation, they will get concerned and the values will not be accurate. Full disclosure will serve you well.

4. DON’T PUT ALL YOUR EGGS IN THE HOME IMPROVEMENT BASKET
Sure, your recently renovated kitchen is fabulous, but don’t take it personally when it doesn’t proportionally increase the home’s market value.
Folks in the biz will tell you that only a fraction of what you may have invested or spent may add value to the house. So, if you are looking for a large ROI from your improvements, don’t be disappointed when the ROI is not as large as you initially expected. This expectation applies doubly for a new pool. Depending on what kind of climate you live in, the pool addition may or may not bring as much value as you had hoped for.

5. DON’T BULLSH*T ON FACTS THAT CAN BE CONFIRMED
Before even listing a property, be sure that you and your real estate agent take a realistic snapshot of what the home actually offers. What are you including in the square footage total. Is it really there or are you just making it up? If you hope that no one will notice that the roof is not actually new, think again. Even if the appraiser doesn’t notice, a subsequent inspection will. Be real about numbers. Puffery will get you nowhere.
In South Florida, it’s even more difficult to fudge the numbers because they exist online at the Property Appraiser’s website and they are typically accurate. If you think nobody will notice, think again. And the appraiser, well he or she will definitely notice and it won’t help you.

At Khani & Auerbach, we are doing our very best to remain at the forefront of the real estate market. We will continue to educate ourselves, our clients and real estate professionals. If you have any questions, please feel free to ask us!

AVOID A FAIL IN YOUR SALE

Posted on by khaniauerbach
2017-01-04-23-45-38
Photo by Khila L. Khani, iTakeGr8Pics.com

Most discussions about real estate transactions concentrate on the needs of the Buyer. However, Sellers have needs, too! Lately, the residential real estate industry has experienced a slight increase in transactions falling apart. The majority of transactions failing to close seem to be limited to homes that are of lower value and/or older homes. There are steps that Sellers can take to avoid a transaction from “blowing up”. Here are a few tips to assist on ensuring the transaction makes it to the closing date:

1. AVOID THE UNQUALIFIED BUYER: While most Florida real estate contracts provide a “loan contingency,” the failure of the Buyer to qualify for a loan AFTER the contract is signed can be very frustrating for the Seller. To avoid this frustration, we recommend that the Seller request a Pre-Qualification letter and in some instances, proof of funds, to give them additional assurances that the Buyer is capable of getting the funds to close.

2. GET AN PRE-CONTRACT APPRAISAL: As the Seller, sometimes it is difficult to accept a price that is recommended by a Realtor. Often times, Sellers believe their property is worth more than it really is, and therefore they set the sales price higher than the market value. Pricing your property too high can sometimes prevent qualified Buyers from looking at your property. Also, once the property is under Contract, the Buyer’s lender will order an appraisal and you, the Seller could be surprised by the result. Surprises are fun when they are related to a party, but not when you are trying to sell your home. We highly recommend that you obtain what’s called a “Pencil Appraisal” to give you an idea of what your property is worth, before you put the property on the market.

3. CONDUCT A PRE-CONTRACT INSPECTION: Most real estate contracts provide the Buyer with an opportunity to inspect the property immediately after signing. This opportunity to inspect is limited to a certain period of time, usually 10-15 days after the contract is executed. When a Buyer inspects the property, their inspection might reveal defects, damages and issues to which the Seller had no knowledge. However, a Pre-Contract inspection from a licensed inspector will help you avoid surprises that might be revealed by the Buyer’s inspector. The Pre-Contract inspection will permit you discover and make necessary repairs before they are brought to your attention by the Buyer’s inspector. This will lessen the probability of a deal falling apart due to the condition of the house.

At Khani & Auerbach, we are doing our very best to remain at the forefront of the real estate market. We will continue to educate ourselves, our clients and real estate professionals. If you have any questions, please feel free to ask us!