We don’t think it is any secret that along with interest rates, the inventory levels are still quite low. This undoubtedly creates an increase in “value” because the demand currently exceeds the supply. However, as real estate professionals who have been in this business a combined 25 years we caution home sellers against unrealistic expectations.
We always appreciate when we are asked to visit a property and provide our opinion of value and during this process we take numerous things into consideration. Market activity is certainly important with regard to competition but equally important is considering what has actually sold and for what price. When we evaluate a property, we want to know what the market’s response has been with similar properties. We also take into consideration how the subject property fits into our market. For example, is it the type of property that is in high demand or is it a place where the pool of buyers is much, much smaller and the inventory at the moment is saturated.
In the last week alone we have been notified of three different issues with property appraisals. In one situation, the appraisal value came in $50k under the list price. It is worth mentioning this was on a single level home, priced at $299k and had three offers within just days of listing. So while the market stats don’t necessarily support the additional 7% that ultimately got added to the price during the bidding war, it certainly supports the original listing price. We had a big problem on our hands. The Sellers turned away two other offers, the Buyers are willing to pay the higher amount but now the property isn’t qualifying for the loan. The reason we mention this isn’t because we think the appraisers are inept, it’s simply to remind everyone that just because someone writes an offer at an inflated amount, likely in an effort to “win” it doesn’t necessarily mean we will get that for your house. As frustrating as it can be, we still need to be mindful that appraisers have a responsibility to do a good job for their “boss” (the banks) which includes keeping them from getting into hot water like they were in not all that long ago. Just because someone says they are willing to pay a certain amount for your home, doesn’t necessarily guarantee that it’s worth that. In the above situation we certainly had a valid argument to support something higher than the submitted value but appealing the appraisal report is quite an undertaking and so our work began.
In another situation recently, we had three offers come in a property in Medford. The sales data supports a price around $380k. Knowing full well that single level homes with RV Parking are in a such high demand, we reluctantly agreed to push the listing price over $400k. The Sellers were very emotional about the home and really needed to get a certain amount from the sale. The first two offers came in within a few days of hitting the market. One was at $380k and the other at $385k. Hmm. Interesting. Then, two more came in and one went well over asking price, which I might remind you, was already inflated. That one was also subject to 100% financing (buyer was putting no money down). We completely support and understand that sellers in today’s market, particularly those who bought at the height of the market, want to get as much as possible for their place, but it is important to keep in mind unless your offer is all cash and not subject to an appraisal, there is a gatekeeper we will ultimately have to face and I would much rather we deal with that in the first few days of the escrow vs. 5-6 weeks later when the appraisal report comes in. Yep, they are that booked up.
We have been reminded about the importance of grace when mistakes are made because we aren’t perfect either. It can be rather frustrating when our patience with the workload is being met with sloppy work and total disregard for a level of quality research. Per the usual, a lot of new licensees, appraisers and even lenders are cropping up industry wide. Why not jump on the band wagon; after all, how hard can it be to sell a house? We appreciate now more than ever the importance of years of experience, how invaluable a working knowledge of the local inventory is as well as a reputation for being fair. It’s not a small undertaking to challenge an appraisal and the process is certainly not for the weak. Nothing guarantees us that the appraisal will be amended but we can rest assured we went to bat for our clients, exerting our best effort to make sure they receive an equitable assessment. We also know that we have put in our time, represented hundreds and buyers and sellers and are granted careful consideration when we take a stand on behalf of our clients. This isn’t something that is bestowed over night. It’s been a long time in the making and it’s more valuable than ever.
Please don’t misunderstand the point of this column. We aren’t pointing fingers at the appraisers right now because we know as much as any they are working their tails off. Their industry is so understaffed and overworked and we have learned many have no choice but to turn away work (lots of it) to keep their heads above water. We instead are hoping to be the voice of reason and to ensure everyone doesn’t get too caught up in what we call the “eBay” mentality; the concept of winning at any cost. Sure, it’s worth seeing what you may fetch and actually kind of fun, but when it’s time to make an informed decision about what is actually going to stick – rely on those who do this day in and day out because “more” is not always “better.”
When you hire an experienced Realtor with a proven track record, you are tapping into years and years of experience. The fee you pay really isn’t directly associated with that one transaction. It’s for the benefit of having access to all sorts of solid information, including a vast knowledge of the current and past market trends and also the association with someone who is respected within the industry and considered to be an expert in their field. It’s having an advocate in your corner who will work on your behalf to be sure you are being fairly represented both in negotiations on your original contract, repair requests and ultimately when it comes time for your property to qualify for the sale. While we can’t claim the last several months and have been all rainbows and unicorns, we are grateful our commitment to our clients and this process remains steadfast.
