Appraisals Can Be Challenged

Appraisals Can Be Challenged

Appraisals Can Be Challenged

Question: We are refinancing our home to replace an adjustable rate mortgage with a good fixed rate loan. Unfortunately, the appraisal came in low and when I received the copy from the mortgage company I noticed many errors, some of which are significant.

For example, the appraisal statet my home is stone and frame instead of stone and brick. It also omits a finished bedroom in the basement and a porch. The appraiser is reluctant to make the adjustment and the loan officer just does not seem to care. They claim they are very busy, and have to rely on the appraiser.

Discussing the potential adjustments with an independent appraiser leaves me to conclude that if the errors are corrected, it would add at least an additional $10,000.00 to the appraisal, and thus about $8,000.00 more in a loan to me.

Should I have my home reappraised? Should I contact the corporate officer of the mortgage company? Should I consider any legal action?

Answer: I cannot recommend you consider legal action. Not every wrong that occurs should be taken to court. Usually the courts want a Plaintiff to demonstrate that he or she has exhausted all other remedies before filing suit.

To prove the measure of your damages — if any — in court, you would need to obtain another appraisal, so you can demonstrate the error of the original appraiser.

I am a believer in going to the top, when necessary. You write that the mortgage company’s loan officer does not seem to care about the apparent error. I suspect that the loan officer’s boss — the president of the mortgage company — would care.

People in business usually are concerned about staying in business, and reputation and word of mouth are a very important aspect of business growth.

Even in today’s market, where mortgage lenders are very busy doing refinancings, I would try to meet with the president of the mortgage company or at least someone in a supervisory position above the loan officer, and discuss your concerns.

The lender may put pressure on the appraiser to reappraise your house. I have heard of numerous instances where appraisers have made mistakes but have been honest enough to go back to the house with a view towards correcting the original appraisal.

You should note that the appraisal business is not scientific. At best, it is a sophisticated art. While appraisers certainly use such bench marks as comparable sales in the area, square footage, replacement value and other similar concepts, the bottom line in my opinion is that appraising a house is a very subjective exercise.

The best test of market value still is what a ready, willing and able buyer will pay a ready, willing and able seller. The price sets the market value. All of the other factors are significant, but not necessarily critical to a determination of price.

You should also understand that the appraisal industry has been under significant pressure — and has taken a number of steps — to correct many of the errors which they made during the 1980’s 90s. Indeed, most appraisers are now taking a very conservative approach, just to be on the safe side. And under new rules, the appraiser must not be selected by the lender; this creates potential problems since I have personally seen appraisers from a different part of the country where the property was located. Clearly, an appraiser must have a working knowledge of the area

If your mortgage lender is reluctant to reassess the situation and to put pressure on the appraiser to go back to the house, then you currently have a problem. While I normally would have suggested you try another lender, unfortunately in the last month, interest rates have gone up some what, and if you apply for a new loan today, it probably would be at a higher rate than the original lenders commitment.

Thus, in your particular case, I would go to the mat with this appraiser and with this lender. Clearly, if there are errors in the appraisal, those errors should be corrected — at no additional cost to you.



How To Stage Your Home While You Live In It

How To Stage Your Home While You Live In It

How To Stage Your Home While You Live In It

In a study performed by a top real estate agency in the country, it was determined that homes that have been beautifully staged sold for approximately six percent above the asking price on average. Furthermore, the estimated time on the market was cut in half. In addition, approximately 81 percent of home buyers surveyed in a separate survey stated that it was easier for them to visualize the home as their own when the home was staged.

As powerful as these statistics are, you may be faced with the dilemma of trying to stage the home while continuing to live in it. You understandably want the home to continue to be comfortable for you and your family to live in, but you also need to enjoy the benefits from staging as well. By following a few helpful tips, you can more easily accomplish your goals.

Remove All Signs of Personalization

One of the most important elements in staging a home relates to de-personalizing it. The home buyer should be able to envision himself living in the home based on its design. He should not feel as though he is walking through your home. This means that all photographs of you and your family should be removed. Sports trophies, religions icons, calendars, home movies and more should be removed.

From room to room, there should be no signs of personalization that tell the buyer anything about you and your family. This can take a lot of work to accomplish, and it likely will leave your home looking rather stark or bare. Investing in affordable and non-descript home decorative pieces, such as framed pictures of natural landscapes or flower vases, may help to dress the space up.

Redefine Each Room’s Purpose

Another hallmark of home staging relates to defining the purpose of the room. In many homes, homeowners have taken the liberty to customize the use of space in some rooms based on their needs. For example, a formal living area in the front of the house may currently be used as a kids’ rec room or a home office. Adjusting the use of these spaces back to their original purpose can be burdensome for your family.

For example, you may lose your home office or kids’ playroom for a few weeks. Keep in mind, however, that you may keep the kids’ toys in a storage bin in the closet, and you can easily pull them out as desired. In addition, you may be able to work at the kitchen table until you sell the house.

Make Use of a Storage Unit

You will likely want to remove some of your belongings from the home. Some individuals will cram their garage full of boxes and furnishings, but this is not ideal. After all, a potential home buyer wants to walk through the garage as well when touring the home. Investing in a storage unit close to your home is a great idea. You will have easy access to your belongings if you need them.

In addition, you can clear away older pieces that look less stylish as well as large pieces, such as a looming china cabinet that makes your dining room appear to be smaller than it is.

Some people will spend a small fortune staging their home. You may find, however, that many aspects of staging can be accomplished through the removal or ideal placement of your current belongings in the home. It can be uncomfortable for you and your loved ones to live in a staged home that must be maintained in pristine condition every day, but keep in mind that this will typically only last for a few weeks at best.

Furthermore, it is well worth the effort. Once you receive an offer, you may revert to a more comfortable routine in the home.