After having the most bizarre experience with an appraisal recently, which went from one extreme to the other, I thought it would make a great article to share.
In my 11 years of real estate, I have seen some crazy appraisals, but this one takes the cake. It’s also a great example of how a bad appraisal doesn’t always have to mean the sale falls apart.
After months of looking for the perfect home, the buyer I was representing found exactly what she was looking for here in East Mesa. The home had been on the market for only two weeks and was priced at $625,000. After some counters back and forth, they agreed on a purchase price of $615,000.
After the inspections were complete, the lender ordered the appraisal. I have to start by saying my buyer was using an out-of-state bank for her loan, which I had advised could cause issues. However, my client had all her personal and business accounts with this particular bank, and she didn’t want to have to start over with a new lender. She assured me she had a great relationship with the bank, and they would take great care of her.
As I mentioned, the home was listed for $625K, and the purchase price was $615K. So, you can imagine how shocked we all were when the appraisal came back at $537K.
As Realtors, we get involved in so many aspects of a home sale, many more than I am sure our clients can even imagine, and one of them is the appraisal. I have taken many classes with appraisers to understand how they value homes and what their guidelines are.
I studied the appraisal and outlined all the things that were wrong—the comps that were too old or too small to be used based on appraisal guidelines and the incorrect value used on items, such as the value of the lot and upgrades. I ran a new report showing exactly why I was disputing this appraisal.
I presented my case to the bank. I was feeling pretty confident this appraisal would be in the 1 percent to get overturned, and we could get an adjusted value. A few days later, the bank called informing us they were ordering a completely new appraisal. While this was rare, we all were very relieved to learn a completely new appraisal was going to be done.
After about a week, we got the new appraisal. As I mentioned, the first appraisal was $537K, and the new appraisal came back at $615K, the exact price of the purchase contract and a $78,000 difference from the first appraisal.
This is a great example of how an appraisal is such an important part of selling your home. When you list your home, your Realtor should thoroughly understand the appraisal process and how to contest an appraisal, if necessary. When situations like this come up, and trust me they do, it’s the Realtor’s knowledge and experience that can literally save the sale.
A bad appraisal doesn’t have to mean the sale has to fall apart. If it’s a bad appraisal, it can be disputed, and if that isn’t a possibility, there are other things both the buyer and seller can do to work through the challenge.
Please contact me if you have any questions on the appraisal process, any real estate questions, or you are thinking of selling or buying a home.
Call me any time, and I will be happy to answer your real estate questions. Please contact me at Lorraine@Homes2SellAZ.com, or call (602) 571-6799. Visit my website at Homes2SellAZ.com.