Since home prices began falling a few years back, property appraisals have also been plummeting. Appraisal complaints have been rising steadily throughout the industry. Buyers and Sellers need to know that Real Estate Appraisers just report what the market is, they do not make or influence the market.
Appraisals can come in low for a variety of reasons.You need to understand that appraisals are based on closed sales for a comparable home or property. A low appraisal can prevent you from buying or selling a home at the price you have negotiated or planned on. If the appraisal comes in really low, the buyer has the option of increasing the down payment to lower the total loan amount. A buyer can also use a low appraisal to re negotiate a lower price. Both buyers and sellers should do their research on values in their neighborhood. The sellers should always clue in the appraiser on recent sales and on any special features that might influence the appraisal, like improvements or special materials that make the property more valuable. The sellers should also be present when the appraisal is being done.
Even when all of the above has been taken into account, some appraisals still come in short. The buyer usually pays for the appraisal and the buyer has the right to ask for another appraisal if the buyer isn’t happy with the results of the first appraisal. Also, the appraiser should be a local appraiser so they are aware of the market conditions of the area.