Orlando area residential real estate specialists, covering Orlando, Oviedo, Winter Springs, Lake Mary, Longwood, Altamonte Springs, Maitland, Winter Park, Casselberry, Geneva, Chuluota, Sanford, Apopka, Windermere, Dr. Phillips, Lake Nona.

  

Happy June! Hope you are preparing for a fantastic summer!

We will continue on the topic of real estate appraisals from last month:

Part III

Last month I discussed the convergence as well as divergence of approach and valuation opinion of real estate agents and appraisers.  As I said, in majority of cases the mortgage appraisal supports the purchase price.  So what happens if an appraisal comes back lower than the purchase price?  For example, a buyer and seller agreed on a purchase price of $300,000 and the mortgage appraisal comes back valuing the home at only $290,000.  When this happens, the transaction can be in jeopardy.   The standard real estate contracts in Florida (FR/BAR-3 and CRSP-13) both contain appraisal condition within the financing contingency.  The provisions differ in detail, but generally if the appraisal is insufficient to meet the loan requirement, the contract can be cancelled.  To salvage the deal, we first request a copy of the appraisal and review it for simple mistakes.  For example, I have seen an adjustment value that’s supposed to be a plus entered as a minus, thus resulting in 200% deviation.  That can be corrected, but if there are no simple mistakes, it’s very difficult to contest an appraisal in recent years.  Many have tried, few have succeeded.   So the next step is typically renegotiation between buyer and seller. Based on circumstances and the perceived quality of the appraisal, sometimes the seller will reduce the purchase price to the appraisal value.  Other times, the buyer will pay above appraisal value.  Most commonly, the buyer and seller bridge the difference together.  When no agreement is reached, the contract can be cancelled and the deal dies.

Can an appraisal also be too high? Yes, but in mortgage process this is not a problem. The bank is happy to make the loan. It does create a problem, when an appraisal done to determine asking price of a home is too high. 

I have quite a few experiences responding to calls from sellers who obtained appraisals first, and then found frustrating lack of success in the market place in trying to achieve the projected price. When I review these price-setting appraisals, I can always find the assumptions that led to unrealistic results.

As I discussed last month, the bank scrutinizes mortgage appraisals. When an appraisal is directly performed for a Seller, there is no such scrutiny.  I’ve seen value comparison derived from sales of higher-end homes, higher-end builder, and/or in higher-end communities.  I’ve seen generalized equating of different features.  For example, both homes are pool homes and assigned equal value, yet the pools are of vastly different quality and appeal.  The result: valuation is supported on paper, but not in the open market in the real world.

I hope you now have a more balanced understanding of home valuation.  Know there is a difference between “market value” and “collateral value” in a mortgage appraisal when you are buying a home.  Also know there is difference between “appraisable value” and “achievable value” when you are selling a home.  When you are in the market to buy or sell a home, there is no substitute for an experienced agent as your consultant. 

Enjoy your summer.  Until next month, take care!

Yien & The Yao Team

 

 

*Finding Your Next Home or Next Investment*

Take advantage of a professional buyer consultation. The Home finding process is not just a database search. Nothing replaces the value of working with an experienced buyer representative. Have a conversation about what you want, and we will work together and guide you towards your dream home.

 


*Selling a Home*

To maximize your chance for selling and at the top possible price, you truly need an exceptional team that has the means and systems to give your home the maximum exposure, a seasoned negotiator that has the skills to represent your interest, and an experienced guide to navigate pass the many pitfalls of a real estate transaction. If you are thinking about selling your home, please give The Yao Team the opportunity to show you how it does pay to hire a specialist.


The Market is Always Changing!
Market Trend Knowledge is Paramount!

In the last 13 years, Orlando’s real estate market went through an unprecedented upheaval, on a scale much more exaggerated than what the nation experienced as a whole. In early 2000’s, Orlando enjoyed aggressive home price appreciation. This attracted investors & speculators from around the country & even internationally.  This in turn drove the demand to a fevered peak up until early-mid 2005.  We now understand this was driven by unsustainable lending of easy money. The market started turning in late 2005 and spent 2006, 2007, 2008, and 2009 in decline. In 2011 the market found “saw-tooth bottom”, driven by a different kind of investor demand.  Home prices are have been rebounding since 2012.  We will discuss the current market condition with you in depth.  You need the up-to-date market information to help you make the right decisions.

 

 

To sell a home in a shifting market, you must market your home expertly & price your home competitively. Your home must be staged & show-ready in order to capture the buyers that do come through your home. To maximize your chance for selling and at the top possible price, you truly need an exceptional team. We have the means and systems to give your home the maximum exposure. We are seasoned negotiators that have the skills to represent your interests and help you navigate pass the many pitfalls of a real estate transaction. If you are thinking about selling your home, please give The Yao Team the opportunity to show you how it does pay to hire a specialist.  


We Can Make the Difference
Are you feeling overwhelmed? Buying or selling a home is one of the biggest decisions you'll ever make. A professional who is understanding and dedicated to your needs is an invaluable partner in achieving your goals. As full-time agents, we are  committed to helping you through the entire process, making your real estate transaction a positive and rewarding experience.

  • Your best interests are our top priority.
  • Our focus is on giving you personal attention and the best service.
  • We know the local neighborhoods, schools, market conditions and more.
  • We will make your transaction as smooth as possible.

 

Get the advice you deserve
The Internet is a great place to find information. But it can't give you the in depth local knowledge and personal service of a local real estate agent. The challenges are getting more complex every day.   Finding the right home for the buyer or bringing the right buyer for the seller is only half the process.  Managing the whole transaction from the skillful negotiation of a contract to finally bringing it to a successful closing takes a full blend of contractual knowledge, transactional experience, patience, diligence, and creativity. You need a professional that is on top of the market who will protect your interests and guide you through the transaction step by step.

Call for a Consultation today
We would be honored for the chance to help you. Please call or e-mail us for an appointment to discuss your real estate needs. Thanks for stopping by our website. We're looking forward to hearing from you!
 

 

 

 

 

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