Over the last few columns I have written about the large number of properties on the market. Hopefully the inventory will diminish over the next several months. If you are a fortunate one and have signed a contract of sale, congratulations. Now PAY ATTENTION! There will be a new road block that could kill your sale or cause you to renegotiate the sales price. It's called the appraisal. This was usually only a concern of the buyer but that is going to change.
Your buyer needs a mortgage so an appraisal needs to be ordered. This process needs to be monitored by you the seller and very diligently I might add. First and foremost, with the collapse of the sub-prime lending market and the sky-high number of foreclosures the appraisal process has and will continue to be under heavy scrutiny. This will mean the appraiser is going to be very conservative in completing the appraisal and the subsequent value.
The second item of interest is making sure the appraiser uses comparable sales that are considered "Arms Length Transactions". Simply put, he does not use comparable sales that were caused by distress such as the death of an owner, pending foreclosure, or major illness of the owner, etc. These types of sales are generally completed below the market value of competing properties.
I have recently seen three (3) units sell for up to $200,000 less then market value due to the ill health of the owners. The next seller in these buildings will need to inform the appraiser of the circumstances of those previous sales. Remember, market value comparables are difficult to come by because of the slow real estate market over the last 12 months. Make sure your realtor and the buyers' realtor is involved with assisting the appraiser.
A short appraisal on your property could lead the buyer to walk away from the sale or force you to renegotiate to the lower appraised amount.
Ric Cornelius is the Broker/Manager of Sand Key Realty Sales and Rentals, Inc. Sand Key Realty has three offices with 40 agents. One office is at 740 S. Gulfview Blvd., Clearwater Beach, 727-443-0032; the second office is at 2701 Gulf Blvd., Indian Rocks Beach, 727-595-5441; and the third office is at 309 Belleview Blvd., Belleair, 727-461-4200.
