How to deal with a low appraisal

Appraisals are not an exact science. They are also only as good as the person doing the appraisal. When you are selling or buying a home, there will often be an appraisal done, particularly if there is financing involved. In most cases, if the seller has priced their property correctly, the appraisal will not be a problem. So the first step in avoiding a problem, is establishing a realistic asking price. Unfortunately, this is sometimes where the problem starts. It is not uncommon for a seller to think that their home is worth more than it is. They often have an emotional attachment, which adds no value to the home. Others will factor in such things as what improvements could be made to the home. One enterprising seller, and their Realtor, actually featured an artist’s rendering of a non-existent beautiful pool and patio, and priced the home based upon that pool and patio. A good place to start in determining the asking practice, is to have a Comparative Market Analysis done by one or more Realtors. This should be done without undue influence. Don’t make the mistake of contacting several Realtors and telling them that you will list your home with the one that gives you the highest value. You want facts, not somebody telling what you want to hear. However, what do you do, if the sellers, buyers, and Realtors all feel that the lender’s appraisal is incorrect? Start with examining the appraisal. Like anyone, appraisers can make mistakes. Sometimes a home that an appraiser used as a comparable sale, is incorrect. For example, the comparable used was trashed inside, where your home was in perfect condition. I once had an appraiser use “ocean access” comparable homes from a neighborhood that was completely different from the “ocean access” neighborhood where the subject property was located. Although both neighborhoods had ocean access, the neighborhood that the appraiser used had narrow shallow canals and a fixed bridge, which was completely different than the wide deep water canals, with no bridges, where the subject property was located. Most of the time, if you can demonstrate to the appraiser that there were errors, the appraiser will update or correct their appraisal. Sometimes however, like the appraiser that didn’t know the difference between the two “ocean access” neighborhoods, the appraiser will refuse to admit an obvious error. In this case, the Buyer simply went back to their loan officer. The loan officer lived in the area, where as the appraiser was from Fort Lauderdale, so the loan officer immediately recognized the error and ordered another appraisal from a local appraiser. Also, keep chattel, or items of property other than real estate, out of the purchase price of the sales contract. This includes furniture, boats, cars, and similar items. Appraisals and mortgages are based upon the value of real estate. Including these items can result in a sales price that is too high. Jim Weix is the Broker/Owner of The Real Estate Company, Inc., with offices in Stuart and Port St. Lucie. He can be reached at 772-288-1900 or