Dogs have fleas. Postal workers have dogs. And Realtors have ... well, appraisers. Yep, no matter who you are, what you do or where you live, life always presents its hurdles.
For Realtors, that hurdle is often appraisals - especially after the housing bust. Today, appraisals can kill a deal faster than a Realtor can make a U-turn.
And appraisals can cut both ways: they can put houses out of reach for buyers and force sellers to settle for a lower price. In fact, I just read about new report from Quicken Loans that said appraisals are coming in at an average of 1.56 percent lower than what refinancing homeowners expected in August.
Sure, 1.56 percent may not seem like a big gap, but it can still cause problems. Quicken Loans Chief Economist Bob Walters says that in some parts of the Midwest, where appraisals are averaging two to three percent less than what was expected, it can mean "a few more thousand dollars." In other words, a true deal killer.
Of course, appraisals vary from region to region, but good Realtors know they need to be prepared for surprises, and they need to prep their clients, too. The more you communicate with your clients, the better chance you have for a favorable outcome.
So first and foremost, open the flood gates on information about appraisals with clients - tell them everything, and discuss scenarios for low and high appraisals to reduce any potential stings.
Here are six tips to ensure you and your sellers are on the same page when it comes to appraisals:
1. Create an improvement to-do list. Long before the appraiser ever enters the picture have an open talk with the seller about key improvements the home needs -- inside and out -- painting, landscaping, plumbing, structural issues, wiring, etc. Explain that any decisions not to improve may very well come back to haunt them during the appraisal.
2. Scrub-a-dub-dub. Yep, clean the home up one side and down the other. A fresh lawn mowing, room decluttering, window washing and floor polishing never hurts.
3. Keep things professional. Request that the appraiser have a residential appraiser certification and a professional designation. An example is the Appraisal Institute's senior residential appraiser designation. Also know that many state licensing agencies make the names of appraisers who have been disciplined available online, so you check out whether the appraiser your lender is using is on the list.
4. Go local. One of the most common problems with appraisals arises from appraisers who aren't local and aren't familiar with a local market. You can request that the lender use an appraiser who is local or at least who comes from a neighboring county.
5. Be present at the appraisal. Greeting the appraiser not only shows your seller you care, it also sends a message to the appraiser you're a hands-on Realtor who expects professionalism. You can also hand over the list of improvements and other important information about the property and market (comps come to mind). Then give the appraiser room to work once the appraisal starts.
6. Review the appraisal thoroughly. You'd be surprised how often simple mistakes arise in appraisals. Give it a close eye and make sure the square footage, the number of rooms and other features are correct and then have the appraiser make any corrections.
Let me hear from you. Are you having any specific problems with appraisers in your city?
Bubba Mills is the CEO of Corcoran Consulting and Coaching Inc. (www.corcorancoaching.com/programs, 800-957-8353), an international Real Estate, Mortgage, and Small Business coaching company. Mills is a nationally recognized speaker, coach and mentor to the top real estate agents and mortgage companies. Visit us at www.CorcoranCoaching.com.