Sell those foreclosures! That’s the best thing Chicago REALTORS® can do to help stabilize the market, said David Hammer, Hammer Appraisal, speaking to a full house of C.A.R. members who attended the Aug. 26 Member Outreach Event at the Oak Lawn Hilton.
Home values are definitely dragged down by today’s surfeit of foreclosures and short sales. Hammer encouraged REALTORS® to show all their clients at least a handful of distressed properties within the mix of homes they might buy. Unlike in the past, he said that many currently distressed properties are in “move-in” condition and offer a great value. Furthermore, foreclosures don’t carry the stigma they once did. But more significantly from the market perspective, every foreclosed home that’s purchased helps “bottom out” the supply.
Hammer also urged REALTORS® to challenge appraisers’ competency if their reports don’t seem to accurately reflect a home’s market (including the quality of its school district and other services) or condition (including amenity upgrades). One sure-fire way to challenge an appraiser is to question a report and say you’d like it reviewed by another appraiser.
A good appraiser knows that there are always ways to reflect a home’s value in any economy, Hammer said. For instance, when completing the check boxes at the top of an appraisal form that ask if a home’s value is increasing, decreasing or stable – to which most lenders’ eyes immediately turn, a good appraiser who checks the “decreasing” box will also note that markets are cyclical and the report simply reflects one specific point in time.
A few more tips:
- Lenders look at home values incremental brackets. For ease of lending, try not to have a home valued at the top of a bracket; have at least one higher-valued home above yours. This may require drawing comps from nearby neighborhoods or other creative approaches.
- Providing appraisers with receipts for recent home upgrades is extremely helpful, demonstrating that your sellers are active participants in the marketplace.
- If you supply comps to an appraiser, be sure they are current (within the past 6 months) and relevant. It is very helpful if you can demonstrate higher-priced homes located nearby.
- Always include photos with comps. Lenders aren’t satisfied with text only, anymore.