Normally I love to write this column. Today, however, it’s a
true sacrifice. I can barely move my poor little arms to get my
hunt-and-peck fingers on the appropriate keys. Why? It’s the start
of Gardening Season. Oh, my gosh. Because we had rains each weekend
so late into the year, the weeds grew. And grew. And GREW. So this
weekend I bent and I pulled and I stretched and I strained to rid
my beds of unwanted flora. Oh, and did I mention the sun? Of course
I put on sunblock, silly. But who knew my work shirt was riding up
while I bent, exposing tender, unprotected skin?
Normally I love to write this column. Today, however, it’s a true sacrifice. I can barely move my poor little arms to get my hunt-and-peck fingers on the appropriate keys. Why? It’s the start of Gardening Season. Oh, my gosh. Because we had rains each weekend so late into the year, the weeds grew. And grew. And GREW. So this weekend I bent and I pulled and I stretched and I strained to rid my beds of unwanted flora. Oh, and did I mention the sun? Of course I put on sunblock, silly. But who knew my work shirt was riding up while I bent, exposing tender, unprotected skin?
Ah, the delights of the late spring. Anyway, I got tomatoes and eggplant and lettuce and cucumbers and squash and lettuce into neat rows. Zinnias, phlox, geraniums, dahlias, marigolds all are neatly choreographed into a dance of color.
So … ouch! … here I go. This week the inventory in San Benito County went over 300 single family homes listed for sale on the Multiple Listing Service (MLS). Whoa, doggies! This is the first time it has reached this level. In south Santa Clara County, there are 441 homes available. The length of time it will take to sell a home has increased significantly due to this increase in inventory.
However, we are still seeing pricing remain stable. The volume of sales is steady; there is just more home availability. We have a balanced market that works well for both buyers and sellers.
If you decide to buy or sell a home this year, you will probably need an appraisal. Dictionary.com says an appraisal is “a valuation of property (e.g. real estate, a business, an antique) by the estimate of an authorized person.” Notice it is the estimate of one person. In other words, it is one person’s opinion.
An appraisal ultimately tells the lender whether the home is a good investment for them or not. No bank or mortgage company will lend more than the appraiser tells them it is prudent to do so.
Some friends of mine recently received an appraisal on their home.
It was, in my opinion, low. They didn’t think it was low. They thought it was an insult, an outrage, an affront upon their dignity and humanity. Okay, so maybe I exaggerate a little, but you get the point.
Apart from hurt feelings, what other effect does a low appraisal have? The first thing to do when an appraisal comes in lower than anticipated is to thoroughly assess the situation. For instance, let’s imagine you are buying a home for $500,000. You want to put 10 percent down. You have an application in for a $450,000 mortgage and $50,000 ready for the down payment. So the appraisal comes in at $475,000. What then?
This is a good time to have a great local Realtor by your side whether you’re the buyer or the seller. If you have an agent from out of the area who can’t help you navigate through this or – God forbid! – you are involved with a For Sale By Owner (FSBO) deal, you’re probably toast.
Usually a good agent can help the parties negotiate to a mutually acceptable agreement. The answer may be as simple as requesting the lender look again at the appraisal. Your agent can help determine how the figure was obtained. He or she can look at the comparable properties used to see if they were indeed reasonable comparisons to the home in question.
But now let’s assume the lender stands by its lower-than-expected evaluation of the sale home. Now what? Well, the buyer can back out of the purchase agreement as long as a contingency for appraisal was in the contract. Because of this possible exit strategy, the seller might be willing to renegotiate the sales price. Another option would be for the buyer to come in with more cash to make up for the differential between the amount of the value of the home and the agreed-upon sales price. There are many options to explore, and it is hard to be specific about the best solution until the situation occurs.
That’s the thing about a good real-estate agent. You just never know when it will be essential to have the best one on your team for a tense negotiation. It’s like airline pilots. Some of the time they kind of sit there while the computer mostly flies the plane. But on that occasion when the landing gear won’t set down or a cabin fire breaks out you’re pretty darn glad someone with experience and education and honed skills is in charge.
Appraisers are similar to Realtors in that they have a code of ethics which is important for them to uphold. They sometimes come under fire from lenders and agents because if the deals don’t close because of a low appraisal commissions don’t get paid. They face pressure to provide the numbers desired rather than deserved. We have some good appraisers around here. They work hard and provide a valuable service to lending institutions and consumers. Don’t give them grief when you disagree with their assessment.
So this week, be kind to your appraiser as well as your Realtor.
