Bryan Vogt: Welcome back everyone. I hope you’re having a fantastic Saturday. Thanks so much for staying with us. I’m here with Mark Dill of US Bank, and we just got done talking about before the pre-approval process in the last segment and how important that can be, not only for the seller, but also for the buyer in giving them the confidence they need to move forward with.
With that said, is now we have the appraisal process. That’s probably, for sellers I can say, Mark, is kind of a scary thing. Especially in the metro-east in Opale and Shiloh, [Belmo 00:00:45], Swansea [inaudible 00:00:47] places where a BA loan might be done. Okay. That sellers get freaked out and sometimes even agents, inexperienced agents get freaked out. Maybe you can kind of shed some light on that.
Mark Dill: Well, in my experience that’s just a misconception. It really is not that much difference between a VH FSA conventional type appraisal. A VA appraisal has to be done by someone that is VA certified and on the VA approved list, which many times may be a local appraiser anyway. So, can they be a little bit more detailed or dig a little deeper? Sometimes yes but it is definitely nothing to be scared about, especially if you’ve got the home price right.
The appraisal process really within three days of application, we have to get out, three business days, we have to get out initial disclosures. Once the initial disclosures are sent, that next day the appraisal is ordered. Then it’s picked up by an appraiser, typically most lenders it would be on a rotation basis and same way with the VA. VA has two weeks from the date that they are assigned the order, to inspect it and deliver it to the lender. Conventional and so forth, there isn’t really a hard line date.
Typically, you’re looking at a week to 10 days from the order being placed. Honestly, that’s pretty typical in the market. The appraisal, when it gets back, obviously it is typically reviewed by some kind of internal checks and measures department before it’s released to me for review, and I immediately get hold of the buyer and let them know where it appraised at, and I will get a hold of the agent and just let them know that hey appraisal’s all good. So they can give the sellers peace of mind but it’s a misconception on the VA. There’s nothing to be scared of with a VA appraisal and I would not hesitate to accept VA financing in an offer.
Bryan Vogt: That’s good to know and a couple of things, and on the real estate side. You can, if you don’t use those pricing guidelines we talked about earlier in the show about location of past sales, current past sales and then choosing from that range, you can get yourself in problems with the appraisal. Again. They’re looking at what sold and they’re gonna be using that as a guideline, and so again, if you decide to shoot the works, that’s your call but understanding that could be an appraisal process even if you get a contract.
We’ve seen people that waited it out for five or six months and they finally got that offer and they got that offer they exactly wanted and they go to the appraisal process, and boom it’s gone. All of a sudden now that six months and that 12 or 15 thousand dollars of cost while they had the house listed on the market and were hoping and praying that they get that, didn’t turn out. So that’s something to keep in mind.
I also like what you said too is, there’s a timeline. I think sellers don’t always understand that. They hear that appraisal’s being done and they’re going to then, next day, get the answer. That isn’t the case.
Mark Dill: That does not. That is not the only appraisal that appraiser has to do. So, that’s the issue there. The thing is, is that if an appraisal comes in lower than the purchase contract, as a lender we have to go by the lower of the appraised value or the purchase price. Whichever one’s lower. So, your new purchase price turns into the appraised value, unless you and the buyer negotiate it.
Bryan Vogt: Sure, sure.
Mark Dill: So, that’s just important to know that okay, what does happen if the appraisal comes in low and that’s what happens. You gotta figure out, okay well how we gonna split this difference? Or am I gonna drop the price? Or what are you gonna do? But it’s an uncomfortable situation to be in, so if you can get it priced right with a professional like yourself, that shouldn’t happen.
Bryan Vogt: That probably the main point too, is look, we’re not in a perfect world, there are unfortunately some bad appraisals that come out there. It does happen, so I don’t want to say that every time, everything is perfect but usually when you have a bad appraisal, that’s a totally different animal than a house not appraising out. What I mean by that, can I give you some examples? Usually when we see a bad appraisal, I mean they miss it by 30, 40, 50 thousand dollars. It’s crazy, maybe you’ve seen the same thing. It just, everyone agrees. It’s not just the seller, the buyer.
Everyone agrees this is a bad deal and those things, it’s not 100% but those are much easier to work out and try to figure out a different path. Where it’s not quite as easy to work out, is when you’re talking about again, 10 or 15 thousand dollars and maybe that’s because someone in the cellar thought the square footage was gonna win the day. Again, square footage is a factor but again, the location’s gonna be more of a driving factor and that’s what the appraisal’s looking at. Or we’ve seen this more than a few times, a lake or a golf course. Mark’s nodding his head, he’s on radio, he forgets.
Mark Dill: Well, that’s exactly right. The thing is, is in ground pools, pools they just … a lot of people spend a lot of money on in ground swimming pools, and all the concrete that goes along with them and you just don’t [crosstalk 00:06:37].
Bryan Vogt: You get to enjoy it and there’s nothing wrong with that. You can have a pool for … I’ve had a pool for 20` years. So, there’s nothing wrong with that. So, you have the enjoyment but again, and again it goes back from the appraisal. I think it’s something like 94% of everything the appraisal looks at is inside the home and there’s something like 6% and that has to cover the outside of the home. That has to cover … so, if it has brick or if it has signing it kind of walks into that. The size of the yard, if it has a fence, if it has a deck, if it has a swimming pool. So that’s not much latitude in there when it comes down to the appraisal, so it’s important to know.
Mark Dill: Right.
Bryan Vogt: Having said that, we’re gonna be talking in our next segment, it’s gonna be a little bit of a wrap up where we’re gonna be talking about what next week’s show is gonna be about. I think you’re gonna be really excited about that. It has to do with staging. That’s a great way of being able to make top dollar off of your home and you’d be surprised on how easy it can be. Look, the book, ready, set sold dot org not dot com. Go get it, there’s this information but there’s so much we just didn’t have time for. So go ahead, get it ready, set sold dot organization, not dot com. Get the book. You’re listening to ready, set sold, I’m your host Bryan Vogt.
Ready Set Sold with Bryan Vogt #05-04: Mark Dill of US Bank: Pricing success and horror stories
June 24, 2017