Q & A with Dottie Herman

» Featured Columnists | By Dottie Herman | January 1, 2010 8:30 AM ET

Q1 - My husband and I are hoping to close on our home soon. We haven't received a commitment yet from a bank for a mortgage and we are getting concerned that they won't approve us. If we do not get approved do we get our down payment back?

A - Most contracts have what is known as a mortgage contingency clause which states that if you do not receive a commitment by a certain time line, or are declined for the mortgage you can get your money back. Make sure that you confirm with your attorney that such a clause exists in your contract and that your down payment is not at risk.

Q2 - My wife and I are looking to put our home on the market and we have been hearing some conflicting reports about the value of our home. What is the difference between market value and the appraised value?

A - In reality, there should be no difference.  Market value is the value arrived at between a fully informed buyer and fully informed seller not under duress.  Appraised value is the market value opinion the appraiser estimates for your home.   If the appraiser isn't experienced in your market, the appraised value may be different than the market value.

Q3 - What standards do appraisers use to estimate the value of a home? It seems as though everyone takes what they say as gospel and your mortgage is contingent on their appraisal but I am unsure how they arrive at the number.

A - Appraisers have to be licensed or certified in the state where they provide services and are required to have a certain level of experience and continuing education to qualify them to provide appraisal services to a bank.  They are required to comply with USPAP which is the Uniform Standards of Professional Appraisal Practice which are standards continually updated by the federal government and administered by each state.  In theory, the appraiser is neutral because they don't have a vested interest in the outcome of the analysis.  However, what really matters is an appraiser's local expertise.  Their ability to understand the nuances of the market determines the reliability of the value estimate.

Q4 - My wife and I are moving to Atlanta because I got transferred for work. We have to go immediately and leave our home on the market in New Jersey. Is it wise for my wife to periodically fly up or can we leave this in the realtors hands?

A -
Trust is the most important factor in your decision-making here.  A real estate professional will have the skills and competency to handle the transaction while you are away.  While the transaction can be left to the advanced selling skills of a great real estate agent, your home may have issues that require you or someone with handy with tools to periodically inspect it for frozen pipes, leaks, or other common issues that occur when owning a home. 

Q5 - We just sold are home and we are thrilled. We moved to a much smaller condo so we don't need all of the furniture in our home we just sold. Can we leave it in the house? Or is this something we have to discuss with the buyer?

A - This is something to bring up with your buyer.  Perhaps the buyer would even be interested in purchasing the items, since furniture does have a value.  If it isn't expressed in your contract, best to not leave it there as it could cause an issue at the closing. 

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