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Hiring an Appraiser for Your Montgomery AL Real Estate

Friday, May 10, 2013
by The Hat Team

The real estate market is recovering but still faces hurdles, notably from tight mortgage credit, but problems with a sizeable share of real estate appraisals are also holding back, or even nullifying, home sales, according to survey findings by the National Association of REALTORS®.

appraisalMost appraisers of Montgomery AL real estate are competent and provide good valuations that are compliant with the Uniform Standards of Professional Appraisal Practice.  However, appraisals generally lag market conditions, and some changes to the appraisal process have been causing problems in recent years, including the use of out-of-area valuators without local expertise or full access to local data, inappropriate comparisons, and excessive lender demands.

NAR has long advocated for an independent appraisal process and enhanced education requirements that allow appraisers to produce the most accurate reports possible. However, appraisers have faced undue pressure – whether from a lender or an AMC – to complete appraisals using distressed sales as comps, to complete an appraisal in an unacceptably short time frame, and to complete a scope of work that is not justified by the fee being offered.

Thus, hiring the right home inspector for your Montgomery AL real estate is as important as the actual home inspection itself. Once your Realtor has given you the names of a few appraisers, you need to begin your own research:

  • Ask potential appraisers about their education, qualifications, professional affiliations, and certifications.
  • Do not hire appraisers who either perform repairs or refer contractors. Although some states allow this, it could potentially represent a conflict of interest.
  • Ask about the technology and methodology used during the inspection. Look for appraisers who use computers and take photos during inspections and incorporate those photos into the report.  Do they include foreclosures and short sales in their comparisons?
  • Find out how long they’ve been in business.
  • Read client testimonials. Do they have testimonials from three delighted clients, or thirty?
  • Read about their resumes and ask about their experience.
  • Be sure that they are familiar your community and have done previous appraisals there.
  • Assess the appraiser's experience with your type of Montgomery AL real estate.

Search all Montgomery AL Real Estate And Homes For Sale.

Sandra Nickel and the Hat Team have distinguished themselves as leaders in the Montgomery AL real estate market. Sandra assists buyers looking for Montgomery real estate for sale and aggressively markets Montgomery AL homes for sale. Sandra is also an expert in helping families avoid foreclosure through short sales and is committed to helping families in financial hardship find options. For more information you can visit AvoidForeclosureMontgomery.com.

Interested in buying a bank-owned home? Get bank-owned listings alerts FREE!

You can reach Sandra by filling out the online contact form below or give her a call anytime.

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Strategies To Remedy A Low Appraisal Of Your Montgomery AL Real Estate

Thursday, April 12, 2012
by The Hat Team

Talk about a setback!  You’ve spent recent months preparing your house for sale or looking for the perfect house to buy, negotiating a fair price, and anxiously awaiting the settlement date.  And now the appraisal on that piece of Montgomery AL real estate has come in below the asking price.  What to do?  First, whether you are the buyer or the seller, remain calm.  This is not an unusual occurrence in today’s market.  Understanding the possible reasons for the disappointing appraisal and exploring strategies to save the transaction are your next steps.

REASONS F0R A LOW APPRAISAL:montgomery al home appraisal

  • Overpricing by seller
  • Declining market values
  • An abundance of foreclosures or short sales in the neighborhood
  • Inflated price resulting from multiple offers
  • Incorrect evaluation by the appraiser
  • Cash back to buyer from the seller
  • Error(s) on the part of the appraiser

WHAT A SELLER CAN DO:

  • Lower the price of the Montgomery AL real estate.  After researching and analyzing the latest comps with your Realtor, realistically reconsider your asking price and decide whether you are willing to begin the selling process all over again.
  • Offer to carry a second mortgage for the buyer if the above option is not possible.

WHAT A BUYER CAN DO:

  • Ask the seller to make up the difference in cash.
  • Ask the lender for a new appraisal after presenting your justification for this request.

OPTIONS AVAILABLE TO BOTH SELLER AND BUYER:

  • Check the appraiser’s report for errors (in facts or omission) in information about the Montgomery AL real estate.  Verify the accuracy of the square footage, the number of bedrooms and bathrooms.  Have any recent improvements you’ve made to the property been included?  If not, appeal the appraisal.
  • Supply to the underwriter a list of recent comparable sales that justify the selling/purchase price and ask for a review of the appraisal.
  • Order a new appraisal.  Although you will have to pay for it, it could be money well spent if it results in a higher appraisal. Your lender will give you a list of appraisers if the loan is an FHA one.  If it’s conventional, it is subject to the rules of the Home Valuation Code of Conduct (HVCC).
  • As a last resort, cancel the transaction.  Most purchase contracts contain a loan contingency which deals with low appraisals.

Search all Montgomery AL Real Estate And Homes For Sale.

Sandra Nickel and the Hat Team have distinguished themselves as leaders in the Montgomery AL real estate market. Sandra assists buyers looking for Montgomery real estate for sale and aggressively markets Montgomery AL homes for sale. Sandra is also an expert in helping families avoid foreclosure through short sales and is committed to helping families in financial hardship find options. For more information you can visit AvoidForeclosureMontgomery.com.

You can reach Sandra by filling out the online contact form below or give her a call anytime.

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Dealing With a Low Appraisal On Your Montgomery AL Real Estate

Sunday, May 15, 2011
by The Hat Team

So it has happened. You’ve spent recent months preparing your house for sale, negotiating a fair price, and anxiously awaiting the closing date. And now the appraisal on your Montgomery AL real estate has come in below the offered price. What to do? First, remain calm. This is not an unusual problem in today’s market. Understanding the reason(s) for the disappointing appraisal and exploring your options in saving the transaction may well be helpful at this point.

REASONS FOR A LOW APPRAISAL:

  • Overpricing by you, the seller
  • Declining market values
  • An abundance of foreclosures or short sales in your neighborhood
  • Inflated price resulting from multiple offers
  • Incorrect evaluation by the underwriter
  • Cash back to the buyer from the seller
  • Error on the part of the appraiser

STEPS YOU CAN TAKE:

  • Lower the price on your Montgomery AL real estate. Research the latest comps for your area, think realistically about your asking price, and decide if you are willing to begin the whole process again.
  • Ask the buyer to make up the difference in cash.
  • Offer to carry a second mortgage for the buyer if the above option is not possible.
  • Check the appraisal for errors in information about your Montgomery AL real estateappraisal.  Is the square footage correct? What about the number of bedrooms or bathrooms? Have any recent improvements you’ve made to the property been included? If not, appeal the appraisal.
  • Supply to the underwriter a list of recent comparable sales that justify the selling price and ask for a review of the appraisal.
  • Order a new appraisal. Although you or your buyer will have to pay for it out of pocket, it could certainly be money well spent if it results in a higher appraisal. If your loan is an FHA loan, ask your lender for a list of approved appraisers. If it is a conventional loan, it is subject to the rules of the Home Valuation Code of Conduct (HVCC).
  • Cancel the transaction. The last resort after trying to resolve the situation. Most purchase contracts contain a loan contingency dealing with low appraisals.
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All About Appraising Your Montgomery Real Estate - Part II

Friday, February 11, 2011
by The Hat Team

Final Estimate of Value

Once the appraiser has applied the three approaches to the appraisal of your Montgomery real estate, he/she must decide which of them is the most reliable and most closely follows the actions of the market. For residential properties, the Sales Comparison Analysis is typically the most reliable. For commercial or industrial properties, all three techniques (or portions of one or more) may be reliable. The appraiser reconciles the various aspects of each technique into what he or she believes produces a credible and supportable opinion of value. The result is the Final Value Estimate, which, depending on the needs of the client, may be expressed as a single number or a range of value.

What If It's Low?

If the appraisal of your Montgomery real estate comes in low, that doesn’t necessarily mean that you can’t complete the transaction. Your options to rectify the situation included the following:

  • appraisalYou can make up the difference in cash.
  • The seller can lower the price.
  • The seller can carry a second mortgage for the difference.
  • You can order a second appraisal
  • You can supply a list of comparable sales and ask for a review of the appraisal.

What Does It Include?

Under the Equal Credit Opportunity Act, your lender must furnish you with a copy of the appraisal of your Montgomery real estate if you request one in writing. Appraisals are very detailed reports, but they should include the following:

  • Details about the subject property, along with side-by-side comparisons of three similar properties.
  • An evaluation of the overall real estate market in the area.
  • Statements about issues the appraiser feels are harmful to the property's value, such as poor access to the property.
  • An estimate of the average sales time for the property.
  • What type of area the home is in (a development, stand alone acreage, etc.).

Do remember that an appraisal of your Montgomery real estate is not a home inspection and cannot be considered a guarantee that the property is in good condition. Appraisers make notes about obvious problems, but they do not perform tasks done by certified home inspectors.

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All About Appraising Your Montgomery Real Estate

Thursday, February 3, 2011
by The Hat Team

A vital step in the home buying process is a professional appraisal of the Montgomery real estate you wish to purchase. An appraisal is an objective analysis of the property’s market value and is required by lenders to make certain that the property is worth at least as much as the amount of the loan you are requesting. Your personal approval is accomplished early in the loan process, but final commitment usually hinges on a satisfactory appraisal, and the lender will study the completed report carefully before determining whether or not the piece of real estate qualifies to serve as security for your loan.

Appraisers are experienced and knowledgeable professionals whom are licensed by the state to estimate real estate values. They must follow rules set forth in the Uniform Standards of Professional Appraisal Practice (USPAP). Once the appraiser has determined the highest and best use of the Montgomery real estate, i.e., the most profitable utilization of the property, he/she will then go about estimating the home’s market value through the use of three basic approaches.

montgomery real estateThe Cost Approach

The Cost Approach: a set of procedures through which a value indication is derived by estimating the current cost to construct a reproduction of the existing structure, deducting the accrued depreciation and adding the estimated land value. The principle of substitution is the basis of the cost approach, in that no rational person will pay more for a property than the amount for which he can obtain, by purchase of a site and construction of a building, with undue delay, a property of equal desirability and utility. Appraisers typically make use of published cost figures when calculating the cost to construct a building. These sources of data are available online and in printed form. Land value is determined by a comparison of the subject site with other similar sites that have recently sold.

The Sales Comparison Analysis

While cost and income considerations are important, the Sales Comparison Analysis is regard as the industry standard for residential properties. Appraisers get to know the neighborhoods in which they work. To assure that any effects (positive or negative) of its location will be reflected in the sales comparison analysis, the appraiser should select comparable sales from within the same neighborhood whenever possible. If this is not possible, the appraiser may need to make "neighborhood" or "location" adjustments for any sales that are not subject to this same neighborhood characteristic.

The same is true of other aspects of your Montgomery real estate, such as the size, quality and features of the buildings. Differences that the market reacts to are adjusted in the comparable sales to reflect what is present in the "subject" property that is being appraised. If a sold home features a fireplace and the subject does not have one, but the market considers a fireplace to be important, the appraiser make a downward adjustment to the sale price of the comparable sold home because it did have one and the property being appraised does not. The reverse is true when the home being appraised has a feature that other homes that have sold do not have. The basic question is what features are present in a property that buyers are willing to pay extra to get, or will pay less if it they are not there? When differences exist, the appraiser must determine how much a typical buyer will add or deduct for it.

The Income Approach

This technique is typically used in appraising income-producing properties. It is a technique whereby the gross or net income of an income producing property is capitalized at a rate which provides a return of interest on the money invested and a recapture of the capital investment in the improvement over a reasonable term of the investment. Capitalization is accomplished for simple residential properties such as rented homes or duplexes by the use of a Gross Rent Multiplier. This involves multiplying the total monthly rent of a property times a number (GRM) found by dividing the sale prices of similar properties by their monthly rents. Commercial and industrial properties involve more complex formulas to determine their value in the income approach, such as cash flow analysis.

What's your Montgomery real estate worth?

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Montgomery Real Estate Appraisal Myths Debunked

Thursday, November 12, 2009
by The Hat Team

A real estate Appraisal is not the same thing as a Comparative Market Analysis (CMA). A real estate Appraisal determines the market value of the property, which is an estimate of the sale price of the house. An Appraisal is mandatory when you are borrowing money from a lender to purchase a home. An Appraisal is done by a specially trainmontgomery real estateed and experienced individual known as an appraiser. 

On the other hand, a Comparative Market Analysis is used to determine a reasonable asking price based on the selling and listing prices of comparable real estate. This is conducted by the real estate agent listing the property. The sole purpose of a CMA is to help the real estate agent advise the sellers when trying to come up with an appropriate asking price. This is different from an appraisal because a Comparative Market Analysis helps determine the actual asking price, where as the appraisal reveals the property's actual value. Appraisers usually use similar research on comparable properties as a factor in determining the property value. 

Here are some myths and facts to help you lean more about the Appraisal of your Montgomery real estate. 

1. Myth: Some people may think that making sure the buyer does not overpay is the main goal of an appraisal. 

Fact: People buying and selling real estate can gather resourceful information from an appraisal. However, the appraiser's intended purpose is to provide protection for lenders. An Appraisal is required before the lender approves a buyer's loan. 

2. Myth: Appraisers determine the property value by multiplying the price per square foot by the square footage of the property. 

Fact: Appraisers determine the value of the Montgomery real estate by other characteristics too. Things they take in to consideration include the location, proximity to desirable destinations, school districts, quality and condition of the property, selling prices of comparable real estate, and other relevant qualities. 

3. Myth: Anyone involved in real estate could conduct Appraisals. 

Fact: States regulate the requirements for Appraisals to obtain a license. Obtaining a license usually includes taking courses, passing an exam, and possible hours of experience. 

4. Myth: There is never an obligation to educate buyers on problems with the home found by the appraiser. 

Fact: The appraiser is required to notify buyers of problems when the buyer is applying for a mortgaged insured by the Federal Housing Administration. For other types of mortgages, the appraiser is not required to disclose potential defects. 

5. Myth: If an Appraisal is done there is no need to obtain a home inspection on your Montgomery real estate. 

Fact: As mentioned earlier the purpose of the Appraisal is to protect the lender. This does more for the people selling the Montgomery real estate. Where as, home inspections are meant to educate buyers on the state of the home and its major elements. 

Get a no obligation Comparative Market Analysis on your Montgomery real estate.

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