Ask Your Appraiser

January 14th, 2020 1:30 PM


5 Reason Why an Appraisal Came in Low


Having an appraisal come in low can be upsetting to both the buyer and seller. Considering the impact a low appraisal can have on the home buying and selling process, it's important to educate yourself on what factors typically lead to a low appraisal. 

1. The house is a disaster

Appraisers are human. In addition to taking objective measurements in your home such as how many bedrooms and bathrooms, they also have to look at subjective measurements as well. An appraiser will look at the interior and exterior condition of your property—if there are dirty dishes in the sink, clothes hanging around, or a permeating stench of cat urine, this will affect an appraiser's judgement. Ideally, your home should be pristine on the day the appraiser arrives from the doorstep.

2. Basements are calculated differently

Your home may have an incredibly finished basement, but the appraiser will still have to calculate the value of the basement differently than the square footage above ground. This is, in fact, one of the more common reasons why an appraisal comes in low. Valuing a basement can often be far more subjective, especially when there are extravagant features such as a home theater, custom bar, or a personal gym. While a nice finished basement can substantially upgrade the square footage and features of a home, the value of the basement space will still only be worth a fraction of what similar space upstairs would be. 

3. Improvements are not always as valuable as you'd expect. 

Home improvements and additions must be of similar value to other homes in the area to be valued as you would expect. No matter how nice, the appraiser will not value the improvements significantly higher than the same improvements in the other homes in the area. One of the biggest misconceptions among homeowners is that there is a 1:1 return on home improvements. That is almost never the case. More often than not it takes years to get full cost or more from making improvements. 

4. The market is moving too quickly

Oftentimes, a reason appraisals come in low is because of the real estate market getting too ahead of itself. If homes are selling rapidly and at increasing prices in your area, this will likely lead to bidding wars where the final price ends up tens of thousands of dollars over the asking price. These bidding wars can cause major dilemmas for an appraiser.

5. The buyer had no guidance on what to offer.

Every day there are thousands of properties that have price reductions, and it only means one thing: the home was not priced appropriately. The seller was overzealous, or perhaps the agent promised the moon in hopes to make a sale. In states where dual agency exists, a buyer will occasionally go directly to the listing agent. They don’t have a buyer’s agent in their corner guiding them, and they end up significantly overpaying for the property. When purchasing a home, it always makes sense to have a buyer’s agent representing your best interests. Don’t be conned by dual agency. 

 

Appraisals By Michael is a leading full-service appraisal firm with extensive knowledge of the real estate valuation process. We specialize in numerous types of appraisal services, including property (commercial and residential), bankruptcy, divorce, immigration, relocation, and estate matters throughout metro Atlanta's $477 billion real estate market. With 20 years of experience in the real estate market, our appraisers work to provide excellent valuation and consulting services to homeowners, financial institutions, law firms, and accounting firms. Our state-of-the-art appraisal methods allow us to provide customized, detailed reports within 1 to 2 business days, helping to simplify your appraisal experience with accuracy and expertise.

For a full list of services, please visit our Services page. For a list of our coverage areas, please visit our Coverage Area page.

Interested in writing a guest article to appear on our blog? Contact us for details.


Posted by Anne-Marie Boring on January 14th, 2020 1:30 PMLeave a Comment

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January 9th, 2020 2:19 PM


5 Common Appraisal Myths


The home appraisal can be a nerve-wracking process for many sellers. While most appraisals don't ruin a sale (fortunately!), there are still some persistent myths that far too many sellers believe. Remember: the more you know, the less likely it is that you'll be surprised!

1. The appraiser can tell you what a buyer should pay

An appraisal is only one piece of the puzzle in the art of pricing homes for sale. The appraiser will give an educated opinion on the value of the home based on training and experience, and — if you appraiser is good at what they do — the price will usually be close to the market value, but not always. 

So it can be pretty frustrating to find out that the bank won't loan the buyer more money than what the home appraises for. If the home is appraised lower than the offer, either you or the buyer will have to come up with the difference if you want to sell at that price. Many times there is a compromise to be found. The seller comes down on their price a bit, and the buyer puts more money down to make up the difference.

2. An appraisal and home inspection are the same

Wrong — they are very different! As stated in our last blog post, a home inspection is intended to identify issues with the home that everyone should be aware of before money is exchanged, while an appraisal aims to determine the market value of the home. While an appraiser may flag problems that they notice during the appraisal, it is in everyone's best interest to hire an inspector in addition to the appraisal.

3. The more money you invest in a home, the more it will appraise for

This is perhaps one of the biggest myths in real estate. In fact, some improvements may actually bring down a home's value! Many sellers are upset when they discover that they do not get equal value for the improvements they've made to the home.

Overall, the market value of your home is based on what people are willing to pay for it. Take a remodeled garage, for instance. You may have turned it into an HGTV-worthy entertainment room, but the reality is that most people are satisfied with entertaining in their living rooms and would much rather have a garage to park their cars in. 

If you are thinking about selling in the next few years, avoid making any upgrades without talking to an experienced appraiser.

4. The assessed value, the appraised value, and the fair market value are the same

There are many confusing real estate terms that seem to be used interchangeably when they shouldn't be, but perhaps none more so than assessed, appraised, and fair market values. Here are their definitions to avoid future confusion:

  • Assessed value: The assessed value is simply what the local tax assessor believes your property is worth. While a majority of people think there is a correlation to the market value, there isn't! Assessed home values are essentially a yardstick for a city or town to collect a sufficient amount of taxes to cover operational expenses.
  • Appraised value: The appraised value is the opinion of a qualified appraiser. (That's us!) This value is often sought either during the purchase and sale of a property or during a refinance by an existing owner. Lenders use appraised value as a basis for giving borrowers a loan on a specific property.
  • Fair market value: The fair market value of a home is the most competitive price a buyer is willing to pay and the lowest price a seller would be prepared to accept. Think of this value as the meeting of the minds of a buyer and seller. Ideally, an appraised value and market value should be similar.

5. A better home guarantees a better price

This is often the hardest pill for most homeowners to swallow. You may have the biggest, most beautiful home in your area, but that does not guarantee that the appraisal price will reflect how exceptional your home is. In fact, standing out too much can even do more harm than good.

Homes are priced based on their area. More specifically, homes are priced based on their neighborhood. The appraiser will consider the size and amenities of other homes in your neighborhood to determine the price of your home. If everyone else has 2,000 square feet of space and laminate countertops, but you have 4,000 square feet and granite countertops, yours will likely be priced somewhat higher, but not nearly enough to get your money back if you have over-improved.

As always, talk to an experienced appraiser before making any major changes to your home. When it comes time to sell, you'll be glad you did.

 

Appraisals By Michael is a leading full-service appraisal firm with extensive knowledge of the real estate valuation process. We specialize in numerous types of appraisal services, including property (commercial and residential), bankruptcy, divorce, immigration, relocation, and estate matters throughout metro Atlanta's $477 billion real estate market. With 20 years of experience in the real estate market, our appraisers work to provide excellent valuation and consulting services to homeowners, financial institutions, law firms, and accounting firms. Our state-of-the-art appraisal methods allow us to provide customized, detailed reports within 1 to 2 business days, helping to simplify your appraisal experience with accuracy and expertise.

For a full list of services, please visit our Services page. For a list of our coverage areas, please visit our Coverage Area page.

Interested in writing a guest article to appear on our blog? Contact us for details.


Posted by Anne-Marie Boring on January 9th, 2020 2:19 PMLeave a Comment

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Are Home Inspections and Home Appraisals the Same Thing?

No, they are not!

Home inspections are an assessment of the property's structural integrity.  Appraisals are an assessment of property value of the estimated real estate home value based on what is seen. Appraisers give an unbiased evaluation at arms-length of the true overall cost of a property after all factors have been tabulated. Appraisers do not test the major appliances and their functions, therefore, appraisals are brief, not thorough. However, an appraiser does measure the dimensions of the property inside and out and give an accurately measured size for a more accurate representation of the true real estate property value.

Appraisals also do an assessment of the surrounding market statistics from comparables, location, the neighborhood area, proximity to amenities offered, and compare their findings with the overall health of the real estate market.

In most cases, appraisers will not recommend fixes during an assessment of property value, mainly because they do not test appliances for workability and function and do not focus on the structural integrity of the home. The main focus for the appraiser is to establish a value of the property, which a home inspector will not.
Home inspections are more thorough and cautious in inspecting appliances, safety issues, and possible damage or potential problems. This may include testing for radon gas emissions, water quality, asbestos problems in the roof, and lead in the paint used inside and out. They also test for other possible toxic materials used on the home’s building structure.

Home inspectors will give you reasons and causes for issues in the home operations, unlike an appraisal. They will often inspect every accessible area, even crawl through crawl spaces and attics to find any unperceived problems in the home such as water damage, termite damage, and mold and evaluate them for safety and maintenance needs.

Typically, home appraisals are for lenders while home inspections are for buyers.
Lenders rely on appraisers to ensure that loans are not given out unless the assessed value of the property at least equals the loan amount. It is imperative to get an appraisal for loans on a property because banks are required by law to issue loans only to appraised properties.

 

Appraisals By Michael is a leading full-service appraisal firm with extensive knowledge of the real estate valuation process. We specialize in numerous types of appraisal services, including property (commercial and residential), bankruptcy, divorce, immigration, relocation, and estate matters throughout metro Atlanta's $477 billion real estate market. With 20 years of experience in the real estate market, our appraisers work to provide excellent valuation and consulting services to homeowners, financial institutions, law firms, and accounting firms. Our state-of-the-art appraisal methods allow us to provide customized, detailed reports within 1 to 2 business days, helping to simplify your appraisal experience with accuracy and expertise.

For a full list of services, please visit our Services page. For a list of our coverage areas, please visit our Coverage Area page.

Interested in writing a guest article to appear on our blog? Contact us for details.


Posted by Anne-Marie Boring on January 6th, 2020 1:30 PMLeave a Comment

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Prior to jumping the broom and saying “I do,” some couples decide to have a contract set in place that protects themselves and their assets. Though normally associated with the wealthy, these documents are now reaching couples across the financial latter establishing a more precautionary future. In order to prevent an unfair or unenforceable agreement, follow these 4 steps when constructing a contract with your attorney (which, by the way, you both need separately.) 

1. Negotiate Terms 
If your partner asks you to sign a prenup, keep in mind that this is not a “take it or leave it” type of situation. You have the right to make changes and ask for compromises so that it reflects the interests of both parties.

2. Ask Questions
Raising questions is an indication that a person has read the document, which prevents any uncertainty about the contract. It’s best to be extremely transparent about the terms of the clause. This understanding, in turn, promotes positivity within the marriage.

3. Have Your Valuables Appraised
As stated, a prenup is most commonly designed to protect the spouse with greater assets from losing an unfair part of wealth in the event of a divorce. Therefore, disclosing real estate and any other valuable items when meeting with your attorney will assist in preserving what’s actually yours.

4. Read The Contract Carefully
We’re sure you’ve heard that a person should never sign a document without properly reading it over. One may end up agreeing to things they dislike, or even fail to realize what they could potentially be giving up. 


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Posted by on March 14th, 2016 1:37 PMLeave a Comment

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June 5th, 2015 11:16 AM

With beautiful weather in season, we think convincing people to spend more time outdoors, getting a little gardening work done won’t be hard right? Well not exactly. But what most don’t know or might not think about is how good it is for the body and mind to spend some time outside in the sun. According to an article written on Yahoo, there was a study that found that a person that spent 30 minutes gardening had lower stress levels than that of a person who spent 30 minutes indoors. Gardening can even help put you in a more positive frame of mind.

If this doesn’t motivate you enough to step outside & smell the roses, maybe a couple of the following reasons can help:

It helps you stay fit. Pulling weeds, digging, and trimming burns calories.

There is no minimum space limit. You can garden in almost any space. Big gardens, small gardens, pots etc.

Your life won’t stop. Luckily gardening does not request as much time from you as people may think. Gardens, for the most part, are pretty low maintenance.

May improve the value of your home. There is nothing better than catching a buyer’s attention with great curb appeal. A buyer will walk into your home, already partially in love with the place.

 

Now I don’t know about you guys, but I can’t think of a better stress reliever than this. 


Posted by Michael Anthony on June 5th, 2015 11:16 AMLeave a Comment

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