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After The Contract is Signed, Behind the Appraisal
After The Contract is Signed, Behind the Appraisal

 
Monday, May 14, 2012
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As a seller, it may seem like once the contract is signed, you have just a few more hurdles to overcome before the closing, yet the appraisal is one that may cause complications. In today’s market, list prices  of homes are on the rise and with the help of your realtor, you likely have come to a list price that is appropriate for your home. A good Realtor will make sure that this price is in sync with the appraised value so as not to disrupt a deal after the contract is signed.  If an appraised price comes in at a lower value, you may find yourself with a cancelled contract.

According to the National Association of Realtors, 21% of members experienced a delay in contracts and 33% experienced a cancellation of contracts. Much of this has been attributed to lenders mortgage applications being denied, and appraisals coming in below the contract price. Today, I would like to explain how appraisals affect your home sale and purchase.

From the fiduciary standpoint of a lender, they will not underwrite a mortgage for more than a home is worth so they will not be left holding the note if a borrower defaults. The amount of the mortgage is based on the appraised value of the property, which can vary from the purchase price. Your home is assessed yearly for tax purposes based on an average of what has sold in the area on the last day of the previous year. If you are a buyer, this information may be found in the Tax Assessor website bcpa.net or I would be happy to look this up for you. Since the tax assessor appraisal is based on an average that doesn’t account for upgrades, it is generally less than the price at which the property will sell. 

In order to reduce the possibility of a cancellation in your contract, it is increasingly important to choose a licensed professional with extensive knowledge of the values in your neighborhood or building, to properly evaluate comparable closed sales and current market conditions to arrive at the best price, whether selling or buying. This professional assessment can reduce the likelihood of your sales contract being cancelled due to a low appraisal, or a seller refusing to negotiate because of an unrealistic low ball offer. I am happy to assist you in this process, since I have orchestrated sales in Broward County for many years and am current in the transaction trends and appraisal prices that are coming in for waterfront condominiums and homes. If you are looking to sell or looking to buy, please contact me for assistance.

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