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House Didn't Appraise

By
Real Estate Agent with Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com 0480809

I've been laughing for a few days about this, so I thought I would blog about it... Granted, the Dallas market does not follow the norm of the "Nationwide" market that the news is always talking about. We never had a bubble and prices have been fairly steady for the past few years, and almost flat the last couple of years.

With that said, one of my husband's co-workers bought a house last year for $184k.  Just over a year later, he decides he wants to buy a house with his new Realtor girlfriend so they list his house for sale.  His girlfriend is a fairly new idiot, I mean Realtor, and according to the MLS has only closed 8 transactions in 3 years.  So, even though she wants to say she's been in the business for 3 years, to only have 8 transactions, she's very much still GREEN and has a lot to learn.  Most of her sales have been in the $75-100k price range.

Anyway, she lists "Bob's" houses for $249k!!  I did say he just bought it for $184k, right??  The area he lives in is seeing about a 3% appreciation and he put about $5-7k of updates into the house.  He thinks his house is made of Gold and apparantly she agreed, and listed it for the outrageous price.

The weeks go by and he continuously tells my husband about all the showings he's having.  Oh yeah?  Where are your offers?  Last week an offer came in.  An offer that he thought was a low-ball and it took them 4-5 days to actually negotiate to a contract.  I just kept telling me husband that he can argue all he wants about what he "wants" for the house, but it won't appraise.  Apparently, the buyer got fed up with countering back and forth, and I guess the buyer's agent knew it wouldn't appraise either, so they finally just agreed on Bob's price because they knew the price would reduce down anyway...

Bob gets all excited that he has a contract and tells my husband that I don't know what I'm talking about and got a contract for $243,000!!!  Yeah, $243k!!  That's only 2.76% off list price which is average for the area...  Fast forward and the appraisal was on Thursday.  House doesn't appraise!!  Bob spends the next few days saying he's going to get a second opinion because there is no way he is going to lower his price... but wouldn't you know it, the second opinion that he wants, he is going to have to pay for!!  Yes, he's too cheap to spend $350 on a second opinion.

Yesterday, my husband comes home and says Bob decided to go ahead and sell the house to this buyer for the appraised amount.  I asked what it appraised for, but Bob wouldn't tell my husband.  It must have been VERY LOW for him to be that embarrassed to not say... but what's even more sad is if he spent the $350, he might have been able to get a second opinion slightly higher to save a couple of thousand dollars.  I guess the numbers didn't make sense to him or his idiot, I mean agent.

I'm counting the days to see it closed in the MLS so I can see the sales price!!  My guess is there is no way it appraised higher than $220k.  No freakin' way!!  LOL!!!

The lesson here is, it doesn't matter what you WANT for your house.  It matters what it will APPRAISE for and what the buyer can BUY it for.  Price your house correctly, and you won't have embarrassing problems like Bob!

Comments (31)

My Essistant
MyEssistant - Santa Monica, CA

Hmmmm.  Do you think you could start a fun A/R "How Much Did It Really Sell For?" pool?  That might be a fun new application that A/R could add to its services.

: )

Jun 15, 2007 01:22 PM
Jim Crawford
Long & Foster - Fredericksburg, VA
Jim Crawford Broker Associate Fredericksburg VA
Now I like that idea!
Jun 15, 2007 01:24 PM
Sybil Holcomb
Ayres Realty - Douglasville, GA

Well just because you have a Real Estate License doesn't take away anyone's "Idiot Factor".  Point is there are a LOT of them out there.

 Can't wait for the actual price.

Jun 15, 2007 11:20 PM
Donna Harris
Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com - Austin, TX
Realtor,Mediator,Ombudsman,Property Tax Arbitrator

Deirdre, that's a great idea! Problem is, everyone's market it so different, answers and guesses would be all over the board.

Sybil, you're so true... but taking the Agency course and passing it should give someone a better idea of the smarter way to represent a client.

Jim, I appreciate your opinion.  I have no resentments towards her just because she really has no business, just a sale every now and then, so there is no competition involved.

Jun 16, 2007 02:20 AM
Danny Smith
DISCOVER TEXAS HOMES - Round Rock, TX
We have idiots..I mean Realtors here also.
Jun 18, 2007 09:39 AM
Gary White~Grand Rapids Home Selling Pro Call: 616-821-9375
Flexit Realty "Flexible Home Selling Solutions" - Grand Rapids, MI
Real Estate Services You can Trust!

Enjoyed the story.  It'll be interesting to see what the final price actually is.

 

Jun 18, 2007 11:01 AM
Leigh Bates
Atlantic & Pacific Real Estate - Flower Mound, TX
The Trinity Group
I'll be waiting to her The Rest of The Story. Dallas area sellers are so anxious to be like the rest of the country and see those large increases in values, but they just don't know how lucky they are! My neighbor had an agent come out to list her home and is going to list it $20 per sq ft than the highest price listing already and I guarantee it doesn't warrant it. Same old story, making them understand pricing?!?!?
Jun 19, 2007 04:28 PM
Donna Harris
Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com - Austin, TX
Realtor,Mediator,Ombudsman,Property Tax Arbitrator
$20 a sqft higher than everything else??  Unbelievable... if that agent takes the listing, that's just another example of buying a listing!  I had an appt last week and went back to stage the house on Monday.  I told them it would sell around $139k.  I got there and the husband had the wife ask if I would list it up at $152k.  What??!!  I just stared at her, and as she was looking at me, she was like, You're right, that's too high, but can we at least do $142k.  I agreed to $142k, but definitely not $152k. $142k is the the same basic buyer as $139k and only $3k off, not 10% off.
Jun 20, 2007 12:17 AM
Leigh Bates
Atlantic & Pacific Real Estate - Flower Mound, TX
The Trinity Group

Our market just doens't warrant that! I had to take a seller today to preview other homes in her neighborhood to convince her that yes, after 10 days on the market and 2 offers - both fell through because of other less expensive homes popping it up she needed to reconsider her asking price. $5000 more than I suggested to begin with... She sees is as we had 2 offers in 10 days - more will come. At least she's thinking positive. It seems to be a trend with me lately and the sellers I have been talking to! UGH!

Jun 20, 2007 05:04 PM
Donna Harris
Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com - Austin, TX
Realtor,Mediator,Ombudsman,Property Tax Arbitrator

2 offers in 10 days??!!  WOW!!  She needs to take one!

I wrote an offer on a house on Sunday that had been on the market for only 5 days.  It sold a year ago for $137k.  It's now listed at $149k as she's getting married.  We submitted an very clean CASH offer for $142k.  They counters FULL price!  We didn't respond.  They called and said the seller would like to revise her counter... they came down $500!  I laughed!  So, my buyers went up $1000 in good faith to $143k.  The seller rejected the offer and wants to sit and wait for other offers.  In our market, she might be sitting another month waiting, and in the meantme, she'll be off getting married and on her honeymoon that she won't have time to respond to an offer... she could have closed on the house before community property laws took over, and she messed that one up... it's not going to appraise at $149k with it selling just a year earlier at $137k.

Jun 21, 2007 12:55 AM
Steven Shewell
Primary Residential Mortgage, Inc. - Ephrata, PA
The Mortgage Maverick
You'll also save yourself a lot of time and aggravation.  Price it right the first time and get it sold!
Jun 21, 2007 01:23 AM
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!

a professional realtor with good comps for their cma shouldn't be far off on the appraisal. you'd be looking at the same info.

next time be nice to your fellow realtor whether she earned it or not. 

Jun 21, 2007 01:55 AM
Chris Tesch
RE/MAX Bryan-College Station - College Station, TX
College Station, Texas Real Estate
Been there, heard that.....  Oh my gosh I love it! Wonder what it appraised for?  Any luck with our friends that I sent there?
Jun 21, 2007 10:46 AM
tatiana wall
COLDWELL BANKER APEX,REALTORS - McKinney, TX

I think your story was a good example of what not using an experience agent can lead you to.

I don't agree with the way you say it...you could have made the same point leaving all those bad comments out...

Jun 24, 2007 12:56 PM
Robin Willis
eXp Realty - Tucson, AZ
CDPE, SRES, Associate Broker
I am sitting on the edge of my seat.  Make sure you tell us what it sells for!!
Jun 26, 2007 08:08 AM
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate
Please post once it closes, I'm dying to find out.
Jul 05, 2007 12:00 PM
Donna Harris
Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com - Austin, TX
Realtor,Mediator,Ombudsman,Property Tax Arbitrator

The sales price was posted today.  Keep in mind that Texas is a non-disclosure state, so not all the facts have to be disclosed.  The amount for closing costs was not listed, so you know the seller netted less, but somehow, the house actually appraised for $232,000.  Yes, I was off from my questimation of $220k, but sometimes appraisers do what they have to do in order to help keep a deal together.

Either way, if the seller had spent the extra couple of hundred dollars to get his own second opinion, he might have netted more, instead of going from $249k down to arguing over $243k to eventually sell for only $232k.

Jul 05, 2007 12:54 PM
David Slavin
Keller Williams Premier - Katy, TX
CDPE, ABR, SRES Keller Williams Premier

I tell my clients this exact potential problem that can come up if they want to list above the market.  I'm shocked that your husbands friend even got an offer.

David N. Slavin, ABR www.sellmyhousedave.com

Jul 05, 2007 01:28 PM
Robin Willis
eXp Realty - Tucson, AZ
CDPE, SRES, Associate Broker
If this is a situation where the appraisal came in high in order to keep the deal together, then the buyer better be prepared to live there a few years.  In Arizona we have issues with a lot of foreclosures happening because buyers bought high in 2005 and can't even get the price they paid back out of the house.  At the time they bought they were, of course, happy that the house appraised that high.  In our case, the appraisers were actually appraising accurately but buyers weren't (for the most part) thinking ahead to the time when the market wouldn't be so red hot.
Jul 05, 2007 01:51 PM
Donna Harris
Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com - Austin, TX
Realtor,Mediator,Ombudsman,Property Tax Arbitrator

David, I was also shocked he got an offer, but they say there's a house for everyone. 

Robin, My parents relocated out of Scottsdale at the beginning of all your activity there, and they got over $75k more than they ever thought they could get for the house.  4 offers by day 2, and another couple offers by day 4.  One of the buyers begged to buy it and asked what it would take and they point-blank said they had offers at full price, so that buyer went over price.  I was amazed, so I defintely know what you're talking about on the higher prices there.  We never had that in Dallas.

Jul 06, 2007 12:45 AM