Dear Sue,
We bought a home, fixed it up and resold it all in the last 30 days.
The appraisal for our new buyer came in $12,000 lower than the original purchase appraisal that we got just one month ago.
This was in just one month of the first appraisal.
We buy homes, fix them, and sell them. We aren’t making tons of money but with this blow, we will make $2,000 each for two months of hard work fixing the place up.
What recourse do we have? It’s my husband and his two partners. I think our real estate agent is inexperienced.
The contract on this house was signed July 18 and we haven’t closed yet.
We are thinking of going to small claims court when all is said and done.
What would you advise?
~ Perturbed Partners
Dear Perturbed,
I talked to Ryan Rivera, owner of Gold Mine Financial. He recommended that you file for an appraisal rebuttal.
He recommends submitting a detailed letter of explanation along with at least three properties that support the desired value.
The explanation letter should include key phrases. An important phrase, if it applies, is that your property is superior to the other comparables due to the repairs and upgrades that you have made and due to pride of ownership.
It would be wise to illustrate superior value by providing evidence that supports it. Submit receipts. Tell the appraiser that you would like the money spent on the improvements, substantiated by the receipts, to be reflected in the appraisal.
Tell the appraiser about your endless “sweat equity” ... hours spent on improving your property.
The turnaround time for a revised appraisal is normally two to three days.
Rivera’s rebuttals have never been declined for review. There’s an 80-percent chance that the appraisal will come back at a higher value.
Rivera credits presentation and documentation to his high success rate.
However, in today’s economy it’s possible that a short sale or two along with a foreclosure that closed escrow in the last month can negatively impact values. The comparable sales will reflect today’s value.
Remember that the sale starts at day one. The lender can’t meet with the appraiser but you and your real estate agent can.
Make it a point with your future sales to provide receipts, before and after photos, comparable sales and the purchase agreement.
Believe me, your appraiser welcomes all of the help he/she can get. And besides, it’s a matter of good Home $$$s and Sense.
Sue Thompson is owner and sales manager of HomeTown Realtors in Auburn. She can be reached at seesue@seehometown.com, or on the web at homedollarsandsense.com.
