WHAT IS MY PROPERTY VALUE?

Whether you are buying, selling or refinancing, you will need to know the value of your property. In today’s market of Short Sales, Foreclosures and Auctions, this is by far the craziest market that I have seen in my 30 years in the business! Even the most seasoned Appraisers and Realtors may have a hard time nailing down the values, in many cases there are extremely high and extremely low comparables in virtually every neighborhood.

In today’s market, the usual procedure to procure a sale is to progressively drop the bottom out of the price until it sells. This is very common in the short sale market and it seems that the price reductions are on a schedule rather than being reduced based on market trends. Unfortunately, that is not good for any of our property values – even those of us who are not selling short. However, although we don’t like it, appraisers must use the foreclosures and short sales as comparables if there are no other acceptable sales in the neighborhood.

In difficult markets times, it is imperative to have a seasoned full time Realtor. It could cost you hundreds of dollars on a failed sale if you are a buyer or even a seller - it might even cost you thousands. Incorrect pricing can also cost everyone a great deal of lost time on the market. There has never been a market where the phrase “time is money” was more true. Timing, market knowledge, and an informed process and procedure are paramount.

In our area we have very distinct ‘buying’ seasons with very different types of buyers in each. Each season may be a good time to buy a condo or a great time to sell your larger family home during the same season, or both. In addition, season trend lines get very smudged as investors try to time their buys to capitalize on the seasonal and financial trends shaping our markets currently. Right now, the existing listings inventory is becoming very low in certain types and price ranges of properties available. I was recently surprised to see that I had very little to show in some neighborhoods to the buyer I was with as these had previously been saturated with low price properties. Low interest rates, rock bottom prices and the homestead capping are all great reasons to stretch to buy sooner rather than later.

BUYERS NEED TO BE INFORMED

To illustrate, after putting together an offer on a property, the home right next to it closed after a huge price reduction. Since this home was comparatively larger and effectively newer it was obvious that our subject property would not appraise with the huge disparity in perceived values. Whenever there is a comparable recent sale in a neighborhood, it must be used in an appraisal, especially if it is right next door! Appraisers today are directed to use comparables sold within 90 days and preferably 60 days, especially if it closed yesterday! Fortunately, our buyer was able to cancel her contract within her “As Is” inspection period rather than spend a considerable amount of money inspecting and appraising a property that was now unlikely to close. With today’s fluid market, one price may seem like a good price today but may not be that way in a week; however I’ve had it go the other way as well when I found a bargain for my buyer and the appraisal came up over a $67,000 higher than the accepted price.

It’s truly is a learned experience-derived skill when determining the value of a property as accurately as possible. A short sale is a perfect example; a seller could accept an offer with a buyer - but the bank may not accept it because it is too low - and may take weeks if not months to get an answer. Determining what a bank is likely to accept and then supporting that low value is completely opposite of what we normally try to do, but it is essentially the same process.

PROTECTING THE SELLER

When I list a property, I am constantly watching the new listings, the pending (especially the short sales) and any closed properties as these numbers will directly affect the ability of our subject home to appraise. It is imperative that we know more than just the data sheet ‘surface’ differences of each property. A good example is when a foreclosure in the neighborhood has a trashed interior but the only indication might be the low price; these hidden facts must be known when comparing properties. Understanding how waterfront, water views, neighborhood amenities, pools and upgrades could affect the value of your subject property is basic. Another good example is how the value of 200 additional square feet could have a huge impact on a small home - but minimal value on a luxury mansion.

Personal knowledge of the comparables and having a good professional working relationship with other listing agents will help immensely when trying to support values. I often tell sellers that the process of listing their home for a price is one thing, selling it for that price is quite another; but our real work begins when we have to support the value to the appraiser.

REGULATION CHANGES

Lenders are telling us that the new banking regulations limit lenders contact with the appraisers. Also, in an effort to save money and streamline the mortgage process, lenders may have a 3rd party company contracting out appraisers that may even come from outside of our local market area.

I have found it absolutely necessary to meet the appraiser at the home and furnish them with facts and direct information about what is really happening in the neighborhood. It is probable that an appraiser from outside of our local area may not have access to the MLS and most likely has never entered any of the comparable properties. If your real estate agent is active in your neighborhood, they have invaluable information. The more homes we have seen personally, the easier it is to convey that factual information to the appraiser. Lowering the price or losing the sale may be the only alternatives you have if the sale price cannot be justified. It is highly unlikely that a buyer will be able or willing to pay an additional down payment to make up the difference between the appraised value and accepted sale price.

If you have questions about buying, selling or saving your home, feel free to call me….I can be reached at RE/MAX of Stuart, 729 S. Federal Hwy, Stuart, FL Direct Line 772-214-4420 or at my website http://www.sarahsellsflorida.com

Sarah Pietkivitch is a Broker Associate for RE/MAX of Stuart. She holds a degree in Real Estate and is an Accredited Buyer Representative Manager (ABRM), Certified Real Estate Specialist (CRS), Graduate Realtor Institute (GRI) and Certified Distressed Property Expert (CDPE). She is a member of the Employee Relocation Council and the Certified Luxury Home Marketing Specialist Institute. She has been a top producing Real Estate Broker and Mortgage Lender for nearly 30 years. Her resume includes Mortgage Lending Manager for a 20,000 member Credit Union and the Broker/Owner of a RE/MAX Franchise in Wisconsin. She was elected to the Executive Council of RE/MAX North Central and has received many awards including RE/MAX Hall of Fame.