How To Avoid Pitfalls In The Sale Of Your Home

< B>Appraisal vs. Market          than the appraised value, which    Value                      often happens in bidding wars                                     over hot property.                 When you sell your home,                                                 appraisers use comps (comparable      We learned the importance of       market sales) of local properties     securing a sufficiently high       sold within the last six months       appraisal when we sold a rental    to value your home. With today's      property in Lake Elsinore,         rapidly rising seller's market,       California. We listed the house    six-month-old information is          for $234,700 on Friday. By Monday  ancient history. Appraised value      morning, we had three offers:      does not always equal the true        $245,000, $255,000, and $260,000.  market value, or what the home        We accepted the one for $255,000   will sell for on the open market.     because the buyers had $80,000                                           down, reassuring us that they had                                        sufficient funds.                  Realtors will give you a                                                 comparative market analysis, an       As usual, the lender sent an       informal estimate of market value     appraiser to review the property.  based on comparable sales.            This busy appraiser didn't take    Lenders, on the other hand, will      the time to view all the upgrades  use the appraised value to            we put into the custom-built       determine a new mortgage amount.      home. Even worse, he used only     Some lenders require that the         comps from the local one-mile      stated property value covers the      radius. Because this home is       mortgage amount plus their            close to a shopping district,      selling costs in case of              there were not many homes sold in  foreclosure. For this reason, a       this limited area during the       sale may fall through if a home       six-month period.                  sells on the open market for more                                        The appraiser used comps six          that your home's appraisal could   months old; during this time          become a problem, make sure you    housing costs in Southern             don't include a clause in your     California appreciated around         sale's contract which states       thirty percent. Sales from six        "subject to appraisal."            months previous should have gone                                         up in value by $30,000 on a           How to Avoid Low                $200,000 home. This means that        Appraisals                     our home should have been worth                                          $250,000 to $260,000, especially      Hire your own appraiser before     since buyers are willing to pay       the sale. Then ask your buyer's    this price on the open market. To     or lender's appraiser to review    increase the value of this home,      your appraisal.                    at the time there was not another                                        three bedroom home listed in the      Retain the option to approve your  area for under $250,000               buyer's mortgage lender. Make      (excluding manufactured homes).       sure that the buyer doesn't use a  However, the appraiser valued our     lender with a history of           home for only $230,000 -- and we      deliberately underestimating       would have lost the sale if the       property values. A good real       offer did not include a               estate agent should know which     sufficient down payment.              lenders routinely under value                                            homes.                             Because a low appraisal can kill                                         your sale, finding a buyer with a     Keep records of repairs and        large down payment provides you       upgrades, including costs. Take    with a safety net. You may also       "before" and "after" photographs.  choose a buyer with strong credit     Create an organized journal with   who doesn't have to put a large       a listing of expenses and include  percentage down. If you think         pictures to show to the appraiser  during the appraisal appointment.     Protest the appraisal with         Stage your home for the appraiser     documentation of your upgraded     like you do for buyers.               expenses.                                                                                                   Secure your own property              Have the buyers make a larger      comparables to make sure the          down payment.                      appraiser uses complete                                                  information. Call real estate         When you sell or buy real estate,  agents with homes in escrow and       remember that the certified        get the sales prices. Make a list     appraisal is just one person's     of these properties with the          opinion of the value of your       agent's phone numbers and give it     home. The opinion that counts for  to the appraiser.                     you is the buyer's: you want to                                          be sure the buyer values your      What to Do When Your Selling       home above all others.             Appraisal Comes in Too Low:                                                                                Copyright (c) 2005 Jeanette        Ask for another appraisal.            Fisher, All rights reserved.                                                                             About the Author: Jeanette Fisher, author of Sell Your Home for Top Dollar--FAST, Home Staging for Top-Dollar Sales, and other real estate and interior design books, teaches Design Psychology and real estate investing. Free "Design Psychology for Selling Houses" Report http://www.sellfast.info/. Source: www.isnare.com