Doron F. Eghbali Residential Real Estate Law Blog on Lawyers.com

Residential real estate market is still reeling from the debacle we experienced some time ago. Unfortunately, even some of the deals with able and willing buyers hit snags when low appraisals seriously imperil the deal. Consequently, this behooves us to ask appropriate questions of appraisers and let them know of the real situation of our real estate market. Let us review some of the due diligence we could exercise as home sellers.

SOME BACKGROUND

In a normal real estate market, if the appraisal is lower than the selling price, the buyer and seller would negotiate further and work it out. However, nowadays, the seller does not have that much of leeway to negotiate as the selling price is very close to or even below what is owed on the house.

The lack of comparable sales in a neighborhood is very problematic for appraisers. Comparable sales include the number of houses sold within a given period in a neighborhood by sellers and not through foreclosures by lenders.

2. Short Sales

In addition, sale of properties through short sales are often sold at lower prices. Short sales are when a borrower owes more on the property than what the property is worth in today's market and the lender agrees to take LESS for the property.

3. Stabilization or Deterioration of Real Estate Market In Your Neighborhood

Needless to say, some residential areas are improving and others are still deteriorating. 

The amalgamation of all these factors make an appraiser's work really hard to accurately and fairly appraise a property. This is why it behooves us as sellers to educate ourselves about the appraisal and take appropriate steps to inform the appraiser of any price fluctuations in property sales in our neighborhood.

EDUCATE YOURSELF ABOUT THE APPRAISAL

• Read Your Home Appraisal: This might seem monotonous and arduous to read your home appraisal. However, think about how much money you would lose plus other ramifications if you do not do it. Then, you will enthusiastically sit down and read it.
• Ask Questions of Your Lender: There is no shame in asking questions. Your lender should take the time to sit down with you and answer your thoughtful questions.
• Ensure Facts About Your Home Are Accurate: Pay close attention to the number of bedrooms, bathrooms and square footage.
• Inform Your Appraiser of Any Fluctuations in Your Neighborhood: It behooves you as the seller to let the appraiser know why some properties in your neighborhood were sold very low. Probably, the couple were experiencing a bitter divorce or the lender agreed to a short sale.

There are two major challenges you could mount against an appraisal:

1. Either the appraiser NEGLECTED to consider similar recently sold property in the final value; Or

2. The appraiser made a SIGNIFICANT error or omission in how your property was reported that could affect value.

This is important to note this second ground for challenge should be predicated on some hard evidence that proves improving the house. In fact, only upkeep and maintenance that includes painting most probably won't affect value. Such improvement should include redoing your kitchen with new granite countertops and cabinetry.

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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. He Primarily Practices Business , Real Estate and Enter tainment Law. Doron Can Be Reached at: 310-651-3065. For More Information, Please, Visit: HERE.