Interest rates are dropping! So what does that mean for the seller? What should a listing agent be aware of?
TIPS FROM...
Steve Mueller*
Certified Real Estate Appraiser in Maryland
With the low rates, buyers are now taking action and are writing offers. In many cases, sellers are entertaining multiple offers. Multiple offers are driving up contract prices. This appears to be great news for the sellers. But not so fast. The property must still appraise at the contract price if the buyers are going to carry a mortgage. Lower interest rates have traditionally lead to an increase in property values and refinance activity. Therefore, many appraisers are now going to see an increase in workload. Appraisers working for low paying appraisal management companies(AMCs)that emphasize quick turn times are now going to be under even more pressure to meet deadlines. This means even less time for market research and report quality will inevitably suffer. When you add in the practice of appraisers working in areas where they have little or no experience, you have the catalyst for a seriously flawed appraisal report. These flawed reports are becoming more and more common. They are NO longer the exception! It can end up with your sellers netting less money.
What can you do as the listing agent? At your office sales meetings several weeks ago, I suggested listing agents become proactive in their dealings with appraisers. This holds true even more now as interest rates are continuing to drop.
Here is a quick list of tips for working with the appraiser.
1. ALWAYS MEET THE APPRAISER AT THE PROPERTY. At this time you can provide them with information about the subject property and the comparables you would like the Appraiser to consider. Also, if applicable, the first few pages of the other offers you have received on the property, as well as, the escalation clauses.
2. Appraisers and underwriters are looking for 3 comparable sales (2 of which settled in the past 90 days) and at least 2 additional pending sales or listings that support the final opinion of market value.
3. Get the name of the appraiser scheduled to perform the appraisal inspection. Do a license search on the state website to make sure that person is a licensed appraiser.
4. Don't be afraid to ask for a photo ID as many times you are entering a vacant property with someone you just met. This also assures that the "appraiser" doing the inspection is also the appraiser who is writing the appraisal report.
5. Know your lenders! All lenders are NOT alike. Not all lenders send their appraisal work to the lowest paying appraisal management companies.(AMCs) There are many lenders who use experienced professional appraisers who provide quality appraisal reports you can rely on. Make it a practice to inquire how the lender selects the appraisers they contract with.
If you have any questions, please feel free to contact me. I am available to handle all of your clients appraisal needs.
Steve Mueller
Certified Real Estate Appraiser
*This Article Republished with permission from the Author, Steve Mueller, Certified Real Estate Appraiser.
