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How to Avoid Appraisal Problems in the Sale of Your Home
by: Jeanette Joy Fisher
Before you sign a contract to sell your home, check to see if the purchase offer depends on financing. Look for a clause witch states that the offer is contingent on your home's appraisal done by the buyer's mortgage lender. This clause causes many home sellers to lose the sale or to lower the sales price later.

Appraisers draw on comparable market sales (comps) of local properties sold within the last six months to value your home. With today�s rapidly rising seller�s market, six-month-old information is ancient history. Appraised value does not always equal the true market value, or what the home will sell for on the open market.

Realtors will give you a comparative market analysis, an informal estimate of market value based on comparable sales. Lenders, on the other hand, will use the appraised value to determine a new mortgage amount. Some lenders require that the stated property value covers the mortgage amount plus their selling costs in case of foreclosure. For this reason, a sale may fall through if a home sells on the open market for more than the appraised value, which often happens in bidding wars over hot property.

We learned the importance of securing a sufficiently high appraisal when we sold a rental property in Lake Elsinore, California. We listed the house for $234,700 on Friday. By Monday morning, we had three offers: $245,000, $255,000, and $260,000. We accepted the one for $255,000 because the buyers had $80,000 down, reassuring us that they had sufficient funds.

As usual, the lender sent an appraiser to review the property. This busy appraiser didn't take the time to view all the upgrades we put into the custom-built home. Even worse, he used only comps from the local one-mile radius. Because this home is close to a shopping district, there were not many homes sold in this limited area during the six-month period.

The appraiser used comps six months old; during this time housing costs in Southern California appreciated around thirty percent. Sales from six months previous should have gone up in value by $30,000 on a $200,000 home. This means that our home should have been worth $250,000 to $260,000, especially since buyers are willing to pay this price on the open market. To increase the value of this home, at the time there was not another three bedroom home listed in the area for under $250,000 (excluding manufactured homes). However, the appraiser valued our home for only $230,000 -- and we would have lost the sale if the offer did not include a sufficient down payment.

Because a low appraisal can kill your sale, finding a buyer with a large down payment provides you with a safety net. You may also choose a buyer with strong credit who doesn't have to put a large percentage down. If you think that your home�s appraisal could become a problem, make sure you don't include a clause in your sale�s contract which states "subject to appraisal."


How to Avoid Low Appraisals

Hire your own appraiser before the sale. Then ask your buyer�s or lender�s appraiser to review your appraisal.

Retain the option to approve your buyer�s mortgage lender. Make sure that the buyer doesn't use a lender with a history of deliberately underestimating property values. A good real estate agent should know which lenders routinely under value homes.

Keep records of repairs and upgrades, including costs. Take "before" and "after" photographs. Create an organized journal with a listing of expenses and include pictures to show to the appraiser during the appraisal appointment. Stage your home for the appraiser like you do for buyers.

Secure your own property comparables to make sure the appraiser uses complete information. Call real estate agents with homes in escrow and get the sales prices. Make a list of these properties with the agent�s phone numbers and give it to the appraiser.


What to Do When Your Selling Appraisal Comes in Too Low:

1. Ask for another appraisal.

2. Protest the appraisal with documentation of your upgraded expenses.

3. Have the buyers make a larger down payment.


When you sell or buy real estate, remember that the certified appraisal is just one person�s opinion of the value of your home. The opinion that counts for you is the buyer�s: you want to be sure the buyer values your home above all others.

About the author:

Jeanette Fisher, author of Sell Your Home for Top Dollar--FAST, Staging Houses, Doghouse to Dollhouse for Dollars: Using Design Psychology to Increase Real Estate Profits, and other real estate and interior design books, teaches Design Psychology and real estate investing. For information on Design Psychology, visit: http://designpsych.com/.For help selling houses, articles, and home staging tips, see http://www.sellfast.info/


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Principles of Interior Design
 by: Kathy Iven

Whether you are working with existing furnishings and fabrics or “starting from scratch” with an empty room, you should always use the elements and principles of design as a guide in choosing everything. The elements are your tools or raw materials, much like paints are the basics to a painter. The elements of design include space, line, form, color, and texture. The principles of design relate to how you use these elements. The principles of design are balance, emphasis, rhythm, proportion and scale, and harmony and unity.

Principle #1: Balance

Visual equilibrium in a room is called balance. It gives a sense of repose and a feeling of completion. A well-balanced room gives careful consideration to the placement of objects according to their visual weight. The elements of line, form, color and texture all help determine an object’s visual weight, which is the amount of space it appears to occupy. Balance also refers to how and where you place the elements (line, form, color and texture) within a room. To maintain balance, try to distribute the elements throughout the room.

• Formal balance, often referred to as symmetrical balance, creates a mirror image effect.

• Informal balance uses different objects of the same visual weight to create equilibrium in a room. It is more subtle and spontaneous and gives a warmer, more casual feeling.

Principle #2: Emphasis

Emphasis is the focal point of the room. The focal point should be obvious as you enter the room; it is the area to which your eye is attracted. Whatever is featured, as the center of interest –a fireplace, artwork or a window treatment framing a beautiful view – must be sufficiently emphasized so that everything else leads the eye toward the featured area. You can add emphasis to a natural focal point or create one in a room through effective use of line, form, color and texture.

Principle #3: Rhythm

Rhythm supplies the discipline that controls the eye as is moves around a room. Rhythm helps the eye to move easily from one object to another and creates a harmony that tells the eye everything in the room belongs to a unified whole. Rhythm is created through repetition of line, form, color or texture. It can also be created through progression. Progressive rhythm is a gradual increasing or decreasing in size, direction or color.

Principle #4: Proportion and Scale

Size relationships in a room are defined by proportion and scale. Proportion refers to how the elements within an object relate to the object as a whole. Scale relates to the size of an object when compared with the size of the space in which it is located.

Principle #5: Harmony and Unity

A well-designed room is a unified whole that encompasses all the other elements and principles of design. Unity assures a sense of order. There is a consistency of sizes and shapes, a harmony of color and pattern. The ultimate goal of decorating is to create a room with unity and harmony and a sense of rhythm. Repeating the elements, balancing them throughout the room, and then adding a little variety so that the room has its own sense of personality accomplishes this. Too much unity can be boring; too much variety can cause a restless feeling. Juggling the elements and principles to get just the right mix is a key to good design.



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