An appraisal is a process in which the value of a home is established. If you find a house you want to buy, make an offer, and it is accepted, then you have what is called a ratified contract. A ratified contract means that you and the seller have agreed on a sales price, on a settlement date, and other conditions. Next, the REALTOR® will get a copy of that signed contract to your lender, who will order the appraisal. The lender wants to make sure that the house on which they are lending money is worth the purchase price.

In normal real estate markets, determining the home’s value is a pretty straightforward process: the appraiser looks at the home you want to buy, and compares it to other sales of similar homes in the neighborhood. They would consider what has sold, for how much it has sold, and also what is on the market, but has failed to sell. Typically, the appraiser would visit the house and take a tour. They would carefully examine the house in terms of size, and condition, and upgrades. Based on all those factors, the appraiser will determine the home’s value, and report back to the lender, telling them whether the house is worth the selling price, or not.

That is, this is how appraisals are handled in a normal market.

But as we all know, today’s market is anything but normal. For many months now, home prices in many parts of the country have been falling. And some lenders want to know not only what the house is worth, they sometimes want to know what it is going to be worth, in six months or a year’s time. And if an appraiser tries to determine property value into the future, sometimes the value projected will kill the deal because the appraisal comes in much lower than the sales price.

If you are buying, you want to get the place for the best price possible. If the appraisal comes in too low, you will not get the mortgage, and perhaps not get the property at all. Here is what to expect: if the appraised price comes in lower than the sales price, the first step belongs to the seller. They might be asked to lower the sales price, to match the appraisal. If they do it, you might just get the house for less money. If they do not lower the price, then you might be asked to come up with the difference. If you have a lot of cash, and you are willing, that is your decision. This is a good time to consult with a REALTOR®, to get their advice.

What can you do if your appraisal comes in low and you want to walk away? In many cases, an appraisal clause in the contract, or your financing clause, might give you the right to cancel the contract. Again…talk to a REALTOR® before placing a contract on a house you want to purchase.

You never want to pay too much for a property and the appraisal can help protect you from being overcharged at the settlement table. But if you truly believe the appraisal is wrong, then talk to your lender. Tell them your concerns. They might be willing to do a second appraisal and keep the deal on track.

If you are faced with multiple contracts on a property you would like to buy, how do you win? For that… We turn to Elisabeth Blakeslee, a REALTOR® with Coldwell Banker Residential Brokerage, in Washington DC.

She suggests that to win, your offer needs to be clearly superior to every other offer.

How do you do that?

• Put down the biggest, earnest money deposit that you possibly can. If you don’t win, don’t worry. Your check won’t be cashed.
• Write a clean contract, with as few conditions as possible (hint: try to do a home inspection before writing the contract so that you don’t have that roadblock to a seller’s peace of mind)
• Find out what the seller needs, and try to give it to them. For instance, if they need to close before the first of the month, make it happen!

And, finally… talk to a REALTOR® who is skilled in competitive negotiations — this could be your edge to winning the deal!

An appraisal is a process in which the value of a home is established. If you find a house you want to buy, make an offer, and it is accepted, then you have what is called a ratified contract. A ratified contract means that you and the seller have agreed on a sales price, on a settlement date, and other conditions. Next, the REALTOR® will get a copy of that signed contract to your lender, who will order the appraisal. The lender wants to make sure that the house on which they are lending money is worth the purchase price.

In normal real estate markets, determining the home’s value is a pretty straightforward process: the appraiser looks at the home you want to buy, and compares it to other sales of similar homes in the neighborhood. They would consider what has sold, for how much it has sold, and also what is on the market, but has failed to sell. Typically, the appraiser would visit the house and take a tour. They would carefully examine the house in terms of size, and condition, and upgrades. Based on all those factors, the appraiser will determine the home’s value, and report back to the lender, telling them whether the house is worth the selling price, or not.

That is, this is how appraisals are handled in a normal market.

But as we all know, today’s market is anything but normal. For many months now, home prices in many parts of the country have been falling. And some lenders want to know not only what the house is worth, they sometimes want to know what it is going to be worth, in six months or a year’s time. And if an appraiser tries to determine property value into the future, sometimes the value projected will kill the deal because the appraisal comes in much lower than the sales price.

If you are buying, you want to get the place for the best price possible. If the appraisal comes in too low, you will not get the mortgage, and perhaps not get the property at all. Here is what to expect: if the appraised price comes in lower than the sales price, the first step belongs to the seller. They might be asked to lower the sales price, to match the appraisal. If they do it, you might just get the house for less money. If they do not lower the price, then you might be asked to come up with the difference. If you have a lot of cash, and you are willing, that is your decision. This is a good time to consult with a REALTOR®, to get their advice.

What can you do if your appraisal comes in low and you want to walk away? In many cases, an appraisal clause in the contract, or your financing clause, might give you the right to cancel the contract. Again…talk to a REALTOR® before placing a contract on a house you want to purchase.

You never want to pay too much for a property and the appraisal can help protect you from being overcharged at the settlement table. But if you truly believe the appraisal is wrong, then talk to your lender. Tell them your concerns. They might be willing to do a second appraisal and keep the deal on track.

High price tag for one football

Dan Marino is still trying to find a buyer for his home in Westin, Florida, so he’s trying a new game plan. According to the Wall Street Journal, the Hall of Famer has decided to throw in $1.5 million worth of designer furniture…and one signed football. Marino first listed the house about three years ago, and has since cut the asking price twice. Marino says that since most of his kids have left home, with the last one about to go to college he and his wife Claire want to downsize a bit from the 15 000 square foot Tuscan style villa. The house sits on four acres, and has ten bedrooms, twelve bathrooms, plus two half baths. In addition, you’ll also find two guest homes, a pool, a putting green and a five thousand bottle wine cellar. And of course, don’t forget about the signed football.
For more information visit: www.online.wsj.com

“No horse’s head required”

You may remember we told you recently that reality TV star, and mob boss daughter Victoria Gotti was facing foreclosure on her Long Island mansion. Well, apparently someone has made her a deal she can’t refuse. The New York Post reports that Gotti has made a deal allowing her to keep her home. Gotti claimed that her ex-husband, Carmine Agnello, took out a mortgage on the property without her knowledge or permission. She had been petitioning to get money he allegedly owed her from their divorce. Now a court has granted her permission to take control of and sell some of Agnello’s property to raise money to keep the mansion. Sounds more like someone made HIM a deal he couldn’t refuse, no horse’s head required.
For more information visit: www.nypost.com

Bueller? Bueller?

Everyone remembers the movie “Ferris Bueller’s Day Off”. Well, now you can own a piece of the movie. According to Chicago’s Daily Herald, the “Glass House” that Ferris’s best friend Cameron Frye lived in is up for sale. Of course, the house is best known for having an angry Cameron drive a Ferrari through one of its glass walls. The good news, that hole has been repaired, and the house now sports a collection of Ferris Bueller memorabilia. The owners of the home were avid car collectors, and the space is still sometimes used for special car events, most recently a Ferrari Club meeting was held there. The 5300 square foot home, located in Chicago’s Highland Park neighborhood is one the market for $2.3 million. Want to take a peek at it?

In the month of April, pending home sales jumped again for the third consecutive month, a good indicator that stalled real estate markets around the country are beginning to bottom out and come back. While low interest rates and low prices have been the driving force for the boost in sales, it seems we’re also seeing some benefit now from the first-time buyer tax credit, as well.

The Pending Home Sales Index measures the number of homes under contract that haven’t yet closed. The NAR says it’s a good indicator of existing home sales a month or two out, since it usually takes that long to close.

The index shot up in the Northeast 32.6 percent in April, and is almost a full percent above where it was a year ago. Gains were a little more modest in the Midwest and West from month to month. The only place the NAR saw a decline was in the South, where the number dropped just 0.2 percent. It’s still above where it was this time last year.

And things are likely to continue to improve.

More and more first-time buyers are being lured into the marketplace, especially now that HUD has announced that some people may be able to use the tax credit up front on certain FHA loans for down payment assistance or for closing costs.

What it means is that come mid-to-late summer, there should be an even bigger jump in home sales as more of those first-time home buyers get ready to close on their new homes.

As always, talk to your Realtor about programs available in your area. They have the knowledge and the tools you need to help get you into the home you love.

And if you’re selling, things are certainly looking brighter than they were even a few months ago. Since more people are entering the market, your home is likely to see more foot traffic and is also likely to move more quickly!

Spruce up your curb appeal! The first thing a potential buyer sees when they drive up is the front of your house. Take a good look at it. How is the paint? Has the lawn been mowed? What are those droopy flowers in the front bed, anyway? The single most important thing you can do for your home is improve its curb appeal — it’s an easy change to make. Plant some flowers; add in some edging around the beds; put in some mulch, and paint! Nothing is a bigger turn off than peeling or faded paint. Make your house look welcoming from the outside, and buyers will be more likely to come inside to take a second look.

Got a tight budget? Grab a can of paint! If you’re low on funds, painting the interior of your home is an inexpensive way to update its look. You can buy a gallon of paint for anywhere from $20 – $30, and that gallon will, on average, cover a 10’ x 10’ room. You may want to stick with neutral colors, but contrasting colors can make a great statement as well. The other benefit: it’s super quick. In less than a weekend, you can paint the whole inside of your house, and give it a fresh, new look.

Don’t overdo it! As we mentioned, the worst thing you can do is go overboard. An incredibly ornate fountain in the front yard might look pretty, but you probably won’t make your money back on the purchase. Also, don’t over-extend your skills. If you’re not comfortable doing tile work…don’t do it. It will likely end up looking worse than the old tile you tried to replace. Just remember to keep it simple, keep it easy, and keep it quick!

Catch Barr Huefner on HGTV’s Designed to Sell, weeknights at 6 p.m. or online at: www.HGTV.com