Help ensure home appraisers in Northern Virginia and Montgomery County, MD have ALL the data they need

June 26, 2012 — I often get questions about appraisers not fully appreciating the rising value of  homes for sale in parts of Northern Virginia and Montgomery County, Maryland. It’s no wonder because more mortgage loan officers and RE/MAX colleagues are sharing experiences of appraiser reluctance to report local appreciation.

A home sale contract does not have to be jeopardized because the appraiser does not have — or does not collect — all the relevant facts. CREDIT: TotalMortgage.com

The impact on buyers and sellers can be significant and maybe even kill a deal. When an appraisal comes in much lower than the mutually agreed-upon contract price, the buyers typically need to revise their loan request. That could mean having to renegotiate the contract price with an unhappy seller. What’s worse, this may not even be possible.

Sometimes the appraiser will do his or her job but experience push-back from the appraisal management company that hired him to “revisit” an upward adjustment, e.g. get rid of it.

A recent poll of members of the National Association of Realtors fthroughout the U.S. found 33 percent reported appraisal problems. This is the single most important valuation obstacle to seeing a sustained recovery in regions such as the Greater Washington, DC area where we have multiple economic indicators that justify rising home prices.

The bottom line: make sure agents on both sides of the transaction have accurate data on “comparable” sales or pending sales. This can demonstrate how a market is improving, especially over the past three months. Make sure the appraiser sees that data. I do this EVERY time for my clients.

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If you’re careful, the coming wave of foreclosed properties can provide an opportunity

June 23, 2012 — A variety of media reports point to a huge and long-lasting wave of REO (real-estate-owned) properties that have been foreclosed on coming on the market soon.

If you’re interested in seeking that diamond-in-the-rough opportunity, as some of my clients are, there are several things to watch out for. What follow are just a few. Best to have me standing at your side guiding you each step of the way.

Foreclosed properties offer investors opportunities looking to build a portfolio of rental properties. CREDIT: Wikimedia Commons

1. Ask yourself: is the property likely to be part of a large collection of foreclosures that will make the neighborhood an attractive place to live?

2. How much in the home has been stripped by the vacating owner? What will it take to replace and or repair it?

4. Can you at least meet the lender’s minimum bid? If that price is a lot more than two-thirds the local government’s appraisal, try to find out why. (I can help you with that.) If it’s a lot less than two-thirds, ask yourself why. That could signal a reason to walk away.

5. Check the paperwork on your bid.

– Are  you providing all the necessary documentation?

– Have you initial everywhere you’re supposed to?

– Have you provided proof of funds?

If the property you’re bidding on is an attractive one and you think there will be competing bids, the slightest snafu could kick you bid out of consideration.

Read more from the Friday, June 22, 2012 editions of The Wall Street Journal. If you’re not a subscriber, call me and I’ll clue you in to the rest of the story.