What if my home doesn't appraise?

Imagine this scenario: You put your home on the market. 
You keep it spotless and you put up with last-minute showing requests. 
Finally, someone makes offer! You negotiate the price, closing date, and other terms.  The buyer's inspector finds a few needed repairs and you agree to do them.  

You start to relax because all the hard work is done.  Then you hear from the buyer's lender and the appraisal is too low. What do you do now? 

You have a few options:

Option 1: Appeal the appraisal or pay for a different one
We could argue that the appraisal is wrong and "appeal" the appraised value. If the buyer's lender agrees, they can opt to send it to their review department. 

Or you can offer to pay for another appraisal (approx $400). Unfortunately it is up to the buyer's lender as to whether they will allow this and if so, they send out another randomly selected appraiser. There is no guarantee that the new appraiser will value your home for more. 

Option 2: Have the buyer reduce their closing costs
If the buyer has asked for you to help with their closing costs, you can ask the buyer to reduce the price of the home by the amount of the closing costs you were going to pay.  For example, if the contract price is $200,000 and the buyer wants $4,000 toward their closing costs, you are really only getting $196,000 for the home. If the home appraises between $196-$200k, you can suggest the buyer reduce the amount of closing costs accordingly so you would still get $196,000.  They buyer may not agree to this, especially if they needed those closing costs paid by you in order to purchase the home.   

Option 3: Take the hit
You can offer to lower the contract price to whatever the appraisal is and still pay all of the closing costs so that the buyer doesn't terminate the contract.  This means that you will either get less than you hoped at closing, or you will have to bring money to closing. This depends on your mortgage balance and your fees for selling the home. If you need to bring money to closing and you don't have the cash, you can talk to your bank about approving the sale and having your bank take the loss.  This is called a short sale and can get very complicated. 

Option 4: Let the buyer walk away
You can hold firm and let this buyer walk away and hope another one comes along whose appraiser thinks your home is worth more. NOTE: If your buyer is getting an FHA loan, FHA appraisals may stay in their system and if the next buyer is getting an FHA loan they may be forced to re-use the current (low) appraisal.  

Option 5: Rent out the house instead of selling
You can decide to become landlords and find a renter to rent until the market improves. I am happy to recommend a property manager so you don't have to deal with the hassles of being a landlord. 

None of the above options are ideal, but the current market means that there are likely to be some homes that do not appraise for the contracted sales price.  Luckily the market has been improving and so this will be a less frequent occurrence. It is best to be prepared ahead of time and know what your options are. 

Guest Blog: Wood vs Composite Decks

My in-laws (Laurie & Drew Danko) realized that their deck needs to be replaced after only 6 years.  After lots of research, here is a synopsis of their research and what they decided. 

by Laurie Danko

We were surprised about our deck's deterioration in just six years.  Drew stepped through a rotted plank, and then a gutter repairman did, too -- thankfully neither hurt himself.  We wondered if we'd gotten scammed with non-treated wood instead of treated. 
As we started looking into this, we learned that arsenic had been a treating ingredient until about 10 yrs ago when it was declared illegal.  The opinion of people in the business is that pre-treated lumber since then doesn't last nearly as long -- typically 5-ish yrs -- ergo, ours.  
So then we considered whether to redo ours with wood and then probably having to redo it again when we put the house on the market down the road.  Or -- pony up now for a more expensive composite that lasts (and a realtor told us would show better than wood) -- and that's we opted to do.  We researched both Trex and TimberTech.  Both have similar new and improved products.  But both have different track records for honoring their warranties.  Trex's is terrible; TimberTech's is excellent.  So especially since these new products have yet to be time-tested, it's a no-brainer to go with TimberTech should there be any kind of warranty issue.
We're also changing to a cable railing system.  There's so much horizontal and vertical wood with the current railing that it blocks most of what is behind it.  This new one should open the view up even more all around the deck.  

Positive Quotes

Every once in a while I like to read some positive quotes to give myself a quick attitude adjustment.  Here are some I found in random places... I'm not sure who all of the authors are, but I've listed them when I do know. 

  • "Nothing great was ever achieved without enthusiasm." - Ralph Waldo Emerson
  • "You become what you think about most of the time." - Brian Tracy
  • "Your imagination is your preview of life’s coming attractions."- Albert Einstein
  • "I will not let anyone walk through my mind with their dirty feet.” — Mahatma Gandhi
  • Wag more. Bark less.
  • Be the light in the dark, be the calm in the storm and be at peace while at war.” — Mike Dolan
  • If you don’t think every day is a good day, just try missing one.
  • If you are not enjoying the journey, you probably won’t enjoy the destination.
  • You can’t stop the waves, but you can learn how to surf.” — Jon Kabat-Zinn
  • “The world is full of cactus, but we don’t have to sit on it.” — Will Foley
  • I don’t like that man. I must get to know him better.” — Abraham Lincoln
  • "Persons are judged to be great because of the positive qualities they possess, not because of the absence of faults."
  • “We awaken in others the same attitude of mind we hold toward them.” — Elbert Hubbard
  • “I have never met a man so ignorant that I couldn’t learn something from him.” — Galileo Galilei
  • What to expect from an open house....

    As a seller, it's easy to get your hopes up that a buyer will walk into an open house and immediately want to make an offer.  In reality, that rarely happens.    Many people who attend open houses are just starting to think about buying a home and just want to get an idea of what is available.  It maybe months or even years before they are ready to buy.  Other people may be neighbors who are curious about the homes in their neighborhood, or people who just want to get ideas for home improvement.

    But there are still many good reasons to hold an open house.  First of all, the extra advertising and signs can bring extra attention.  Secondly, some of those neighbors and looky-loos might just know someone who is in the market and who might love your home.  And who better than a neighbor to spread the word about the awesomeness of the neighborhood?

    Today was one of those rare days when an open house resulted in an offer!!! 
    A family visited the home I was holding open in Garner.  They were impressed with the many updates and their daughter fell in love with Bob, a frog puppet she discovered in one of the bedrooms.  Their agent called me a few hours later to let me know that they loved the home and are planning to put in an offer.  So despite the rarity of an open house leading to an offer, we never give up hope.  (p.s. Thanks, Bob - you are a great salesman!)

    Animal Rescue Quote

    "I am involved in animal rescue: my wallet and gas tank are always running on empty, my house is never quiet or free of hair, nor is my car, my in box is full of ongoing despair and misery, but my heart and soul are replensished with unconditional love, loyalty, and joy that can only come from a rescued animal." 
    - Anonymous

    I saw the above quote earlier today and was reminded why I am involved in animal rescue.  
    Not only am I energized by the love & joy I get from my rescued pets, but also from the people I meet and the friends I have made because of my involvement in animal rescue.  

    I started volunteering at the Animal Protection Society (APS) of Durham in early 2004 as a dog feeder and walker.  I imagined that I would get to know all of the dogs and help them learn a few tricks. I volunteered 2-3 days/week and discovered that there were just so many new dogs coming in each day that I could not possibly get to know them all.  I learned that the APS accepts approximately 20 animals per DAY!  I was shocked that so many animals were being surrendered and/or brought in as strays so I decided to join the education/outreach committee.  

    This committee goes into schools to talk to kids about various pet-related topics such as keeping pets for life, how to be a responsible pet guardian, safety around pets, etc.  I love all of the questions I get from kids and I love to see how great they are around my 2 rescued mutts, Josie & Cooper.  If I'm talking about spaying/neutering, I sometimes get asked why a male dog needs to be neutered since the female is the one having the puppies.  Or I get asked about which parts are actually removed or what it means for a female to be in heat.  I try to be honest and matter-of-fact and the kids seem to appreciate that without too much giggling. 

    Many of my friends are fellow volunteers or staff members at the  APS or other animal rescue organizations.  As difficult as the work can be, just knowing that we are making a difference is all the reward we need!