In my previous post, I listed the first half of ten things you should know about appraisals. Below you will find the last five facts.
6. Specific “red flags” are viewed by underwriters on every appraisal regardless of the buyer’s credit, down payment, type of loan, etc.
“Red flags” include those items listed in the previous email, as well as:
• Health and safety issues
• Remaining economic life of property is shorter than loan term
• Land value/home improvements exceed typical ratio
7. Condition matters.
Property condition is no longer a concern of just FHA loans or programs with low down payments. It is impossible to get standard financing for any property designated by the appraiser as “fair,” “below average” or “poor.”
8. Everything that is in the MLS or the contract is reviewed by the appraiser.
Examples of deal killers, unless addressed and reworked, include:
• Repairs (e.g., “seller to contribute 6 percent toward closing costs in lieu of foundation repairs”)
• Personal property (e.g., “pool table, couches, big screen televisions, lawn mower, etc., to be left in the house”)
It is best to leave personal property items out of the contract initially, but contact me to discuss further.
9. If you or your real estate agent cannot find comparables to support the property value, the appraiser likely can’t either.
Make sure you review the comparables prior to signing a contract or listing your house.
10. Most investors no longer allow the contract sale price to exceed the list price.
If you plan to do this (to cover your closing costs), please discuss it with me first. We do have some investors who will still allow this.
I am always available to assist you should you have questions or concerns regarding the home-buying process. Contact me today, and I can help guide you through your transaction and into your new home.