What Can I Do About a Low Home Appraisal?

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The right valuation of your property is critical at all stages of ownership, from the first day you walk through it to the day you finally sell it. A home appraisal can determine the purchase price you will pay, the value of the home as you rent it out, what you will pay if you refinance your mortgage, and more. That fact can be frustrating, especially if it turns out at some point that your property is appraised for less than you expect.

Is your home appraisal lower than anticipated? Are you, as a buyer, struggling to determine whether the value of a home is higher than it seems or finding it difficult to secure a mortgage loan? Do you want to rent out your property, but have a low appraisal value that is preventing you from achieving your goals? 

Whether you’re buying a home or getting ready to sell, the following guide will provide easy-to-follow strategies to deal with a low appraisal.

Why Low Appraisals Happen

Low appraisals occur when the home appraiser sets the value of your home lower than you anticipated. Sometimes, that may happen due to good reason: falling real estate value in your area, for example, or additions to your home that did not cause the rise in value you originally anticipated. In other cases, however, low appraisals may happen for other reasons. You may end up with a low home appraisal because:

  • Market value in your area has declined
  • The seller overpriced the home in the first place
  • There are multiple foreclosures or short sales taking place in your neighborhood or nearby
  • The appraiser made an error, either due to failure to understand the area or due to missing information

Low appraisals can have a huge impact on you as the buyer or homeowner. For example, a low appraisal can affect the refinance on a mortgage, especially if the appraised property is a rental. They may also impact the property’s perceived value if you’re getting ready to sell, or make it hard for you to sell your home.

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5 Tips for How to Fix a Low Home Appraisal

Fortunately, you aren’t necessarily stuck with a low home appraisal. Whether you’re planning to buy, rent, refinance, or sell, there are several strategies you can use to manage a low home appraisal.

1. Get a second opinion.

Sometimes, you will end up with a low home appraisal from a home appraiser who simply doesn’t understand the local market or who doesn’t have a great deal of experience yet. The appraiser may, for example, forget to look at pending offers on a home, or to consider local real estate prices. In another area of the country or even another area of your city, your property might be worth less. A second opinion can help set things right. You should expect to pay a second appraisal fee for a second appraisal.

2. If you own the property, make needed repairs.

Ideally, if you own the property, you should make needed or obvious repairs before the home appraiser comes out to take a look at your home. There are some factors of your home’s value, including the square footage and the neighborhood, that are out of your control. Taking care of repairs and upgrades before the appraisal, however, is one thing you can control.

3. Contest the appraisal.

Sometimes, you may not need a second opinion. Bring the original appraiser back and have them take a second look over the property. Let them know about any elements of the home’s appraisal that you feel were incorrect. You may want to point out features the appraiser may not have noticed or ask the appraiser to take a second look at the neighborhood.

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4. Have your real estate agent work contact other local listing agents regarding pending sales.

If you’re getting ready to purchase or sell a home and it comes back with a low appraisal, you may need to take a harder look at what other properties are going for in the area. If you received a low appraisal of the home you’re trying to sell, but comparable homes in the area with similar features and square footage are going for much higher rates, someone may want to buy the property for your asking price–even if the appraised value is lower than that price. On the other hand, if property values in the area are lower than anticipated, it might be a good idea to decrease the price of the home.

5. Prepare to pay cash for the amount above the appraisal value.

If you’re planning to purchase a property for more than the appraisal, you may need to prepare to pay cash for any amount over the appraisal value. Keep in mind that it may take more time to build your home equity if the appraisal value is significantly lower than the asking price, and make sure you’re able to receive a home equity loan for the needed amount after adjusting your down payment.

If you have questions or concerns about a low home appraisal, your best best is to speak with a real estate professional to learn more about the process and get the answers you need. That expert partner will also be able to provide additional guidance.

Common Mistakes Homeowners Make 

While there are some strategies you can use to deal with an unexpectedly low home appraisal, it may also help to manage the appraisal correctly from the beginning. Do you have an appraisal scheduled? Avoid these errors.

Failing to review the appraisal for errors

If the appraiser makes errors in determining the value of your home, it can have a substantial impact on its overall value, on your mortgage, and even on your ability to rent out the property. Always check the appraisal for any obvious errors.

Missing permits for work done on your property

Keep in mind that any time you make upgrades to your property, you will need to have a permit. Failure to use one can impact your home’s value later.

Choosing an appraiser who does not know the area

You may try to save a little money on the home appraisal by using an expensive appraiser, but it may end up costing you more if the home appraiser does not know the local area.

Failing to be present at the home inspection

You know things about your home that the appraiser may not. Being present will give you a chance to point out the best elements of your home.

Not taking the right steps in dealing with a home appraisal can leave you unable to get a mortgage loan or struggling to set the right land value. Fortunately, an effective property appraisal can help you set the right listing price or make it easier for you to sell or buy a house.Do you have questions about home appraisals? Contact Nomadic Real Estate today to speak with an expert about any home appraisal questions you might have.

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Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

You'll also find a month-over-month operating statement:

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Responses will show up in the conversation ticket:

  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Each conversation will be logged in its entirety:

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

View a snapshot of income and expenses on your dashboard:

See every transaction in real-time on your ledger:

Statements and forms will be posted to your documents library:

View a suite of real-time financial reports:

See a running list of all bills, and drill down for more detail:

Under Bill Details, you'll find dates/descriptions/amounts and more:

You can also communicate with your Account Manager through the portal:

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.