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Buying and selling real estate is a roller coaster, no matter which side of the deal you’re on.
An appraisal can make or break a deal for either party. And a hot real estate market can complicate appraisal results.
What is an Appraisal?
A real estate appraisal is a professional assessment of a property’s fair market value. A licensed appraiser inspects the property and uses comparables to produce an unbiased valuation. The appraisal is used in pricing and negotiating when buying, selling, or refinancing a property.
Appraisals & Your ROI in a Hot Real Estate Market
How do appraisals impact your ROI when the real estate market is hot?
Comparables – or comps – are real estate properties similar to the property you hope to sell or buy that have recently closed in your area. Characteristics like size, condition, features, location, and sale prices help appraisers assess “comparable” value.
Appraisers use comps that have closed within the last 90 days – not pending sales or listings. As a result, appraised property value can lag behind a hot, fast-moving real estate market, and an appraisal may not reflect the sale price you’re asking based on current market activity.
What can you do?
First, keep in mind that historically, a fourth of all offers are above the appraised value of a property.
Secondly, ensure that an appraiser is fully apprised of the value adds to your property and how it stacks up to comparables:
- Make a detailed list of all home improvements and upgrades, including dates and expenditures. Include invoices and names of contractors.
- Research recent nearby real estate sales. If you know why a property sold below market value (the owner took a loss to relocate quickly for a job), include those details.
Finally, prepare your property prior to an appraisal to guarantee a fair assessment of value.
Help avoid an overly low appraisal and improve your ROI: Know your local real estate market, stay informed, and communicate with your appraiser!
Make Home Improvements with an Oregon Hard Money Loan
Whether you’re planning pre-listing home improvements or renovating a just-purchased property, we can provide easy financing. Gregory M. Russell is a respected direct private lender to Oregon real estate investors. Our equity-based hard money loans offer hassle-free funding for upgrades and real estate purchases without the lengthy approval process of conventional loans. If you have adequate equity, you can have cash in hand within days without concern about creditworthiness or employment history. Call us at 1-888-477-0444 or fill out our online real estate loan request form. We’ll help you improve your property and boost your portfolio.