A Tale of an Abysmal Appraisal

By
Managing Real Estate Broker with Magnolia Realty ~ Granbury TREC #547752

A Tale of an Abysmal Appraisal

Appraisal Surprise

I can just hear you all inwardly groaning on this topic. Most likely we all have an appraisal horror story. That no so-great phone call saying the home or building did not appraise for the sales price. You can feel you stomach drop when you hear this right?

 

The phone calls commence to the Sellers, the Buyers, the other agent, etc. Re-negotiations begin and far too often, the deal is dead. Not to mention, Sellers are forced to either accept a lower price or go back to the drawing board with the home put back onto the market.

 

This appraisal tale has a happy ending. I listed a very unique, historic property. Right on the town square in a city that has been consistently on the uptick for years. Great economy, one of the top Texas towns for tourism, and a demand for businesses wanting to be on the historic square. I spent a great deal of time researching rental rates and sales of other buildings on the square prior to listing this particular building.

 

Any of you who work in commercial properties especially unique commercial properties understands the challenge when finding comparables. Knowing the history of current businesses, owners, tenants, etc. all provide vital information for us. Knowing we as agents have a challenge in pricing, we certainly understand the challenge for an appraiser as well.

 

What we were not prepared for was the absolute WORST appraisal I have ever seen! The appraisal came in $150,000 BELOW our agreed upon sales price. I knew something was amiss. This didn't even make sense. Perhaps the appraiser left out the building out back that went with the property? 

 

In discussions with the current owners, the said, "Hmmm, that name on the appraisal sounds familiar. We had it appraised 8 years ago when we refinanced." Luckily they found the copy and low and behold, the same appriaser! Also to our astonishment, this appraisal done EIGHT years ago was for the EXACT amount the current one came in with. Now that is astonishing.

 

The bank contacted the gentleman (appraiser) and hoped that there had been a mistake. Surely he would have clued in that in 8 years in a thriving area a building like this would have appreciated some! "Nope, he said, that is what I appraised it for again!" Wow, these buyers were charged $2,700 for what appeared to be a rubber-stamped appraisal.

 

Thankfully, my clients and the buyers agreed to meet face-to-face to discuss options. All agreed something didn't smell right. We came away from that meeting with my Seller's agreeing to pay for a new appraisal and the buyers chose a new bank. If the new appraisal came in low, we would re-negotiate. If it came in higher than our agreed price, they would sell at the contract price.

 

Well guess what folks??? The new appraisal came back this week and GUESS WHAT? Yep, it appraised $10,000 HIGHER than our contract price!  Woo hoo! An amazing $160,000 difference from the first appraisal.

 

Here is the lesson in this story. Those of us who sell unique, historic properties understand these are difficult to price. However, we do know our stuff! Our lesson was in persevering, thinking outside of the box and including all parties in the solution.

 

My Seller's are beyond happy and the buyer's are as well since now they are confident they are purchasing a building with equity already in it! The abysmal appraisal is now history and all parties can move forward. They are happy.

 

When in doubt, seek it out! We do know our business so stay confident, fight the good fight, and push forward when something seems truly off. Thank you to those appraisers out there who work hard to keep our industry on our toes and who do their work diligently and carefully.

 

So rock on everyone! Hang in there and look for creative solutions when you are faced with this type of scenario. It ain't over till it's over!

Posted by

     Magnolia Realty Granbury    

"Have you fully lived today?"

   Paula L. McDonald ~ REALTOR®

       Managing Broker ~ Granbury, Texas 

 936-203-0279 Direct

Selling Hood County and surrounding areas!

PaulaMcDonald@MagnoliaRealty.com 

      CNE

Houzz      

 John Maxwell

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Copyright 2017 Paula McDonald

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Rainer
79,400
Susan Hale
Re/Max Realty of Defiance,Inc. - Defiance, OH
Re/Max Northwest Ohio Realtor

Amazing turnaround.  The lst appraiser surely isn't one to take any credence in for any future appraisal business.   I'm surprised you didn't have a picture of yourself throwing all the papers in the air over that lst appraisal.  Best wishes in your real estate listings/sales in 2018.  Glad it all worked out for you and your customers.

Jan 12, 2018 02:55 PM #1
Rainmaker
1,089,591
Paula McDonald
Magnolia Realty ~ Granbury - Granbury, TX
Magnolia Realty ~ Granbury, TX 936-203-0279

That would have been a great idea Susan Hale to be throwing the papers because that is what I felt like after the orginial one came in.

Jan 12, 2018 02:56 PM #2
Rainmaker
2,040,775
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

During one of my last sales, we received an exceedingly low appraisal on the home I had listed.  Had I been the seller I would have agreed that we needed to just put it back on the market and begin again.  But, the seller had signed agreements on her new place, and wanted to put the whole thing behind her and move on.  The client's wishes are more important than those of an agent, so we moved on.

Jan 12, 2018 03:45 PM #3
Rainmaker
1,089,591
Paula McDonald
Magnolia Realty ~ Granbury - Granbury, TX
Magnolia Realty ~ Granbury, TX 936-203-0279

Myrl Jeffcoat yes sometimes that is the end result. In this case, the fact that the 8 year old appraisal by the same man for the exact to the penny price caused the raised eyebrows.

Jan 12, 2018 03:48 PM #4
Ambassador
1,603,038
Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-953-8818

Great job Paula McDonald  you did your job and knew the true value of this property.  Luckily the buyers were willing to go with another bank and a new appraiser who did his due diligence and the sale went to closing

Featured in BananaTude

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Jan 12, 2018 03:52 PM #5
Rainmaker
3,246,492
Dorie Dillard
Coldwell Banker United Realtors® ~ 512.346.1799 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good evening Paula McDonald ,

You are the consummate professional! Great way of handling a difficult situation but you knew the value and proved it!! Congratulations!!!

Jan 12, 2018 04:32 PM #6
Rainmaker
1,089,591
Paula McDonald
Magnolia Realty ~ Granbury - Granbury, TX
Magnolia Realty ~ Granbury, TX 936-203-0279

Thank you Hannah Williams - it does pay to stick with things like a dog on a bone.

 

Jan 12, 2018 04:43 PM #7
Rainmaker
1,089,591
Paula McDonald
Magnolia Realty ~ Granbury - Granbury, TX
Magnolia Realty ~ Granbury, TX 936-203-0279

Awe, thank you Dorie Dillard - hope all is going well for you in the Austin area.

Jan 12, 2018 04:44 PM #8
Rainmaker
2,502,530
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Paula,  I had a similar thing years ago on a condo. The seller agreed to extend time to close so the buyer could start over with another bank and get another appraisal. Appraisal came back at value.  It is unfortunate that bad appraisers are paid no matter what. 

Jan 12, 2018 05:39 PM #9
Rainmaker
2,284,920
James Dray
Fathom Realty AR LLC - Bentonville, AR
Exceptional Agents, Outstanding Results

Morning Paula.

Thankfully I haven't had this one happen to me.  Good thing your sellers had kept that paperwork from the first time.  

Jan 13, 2018 01:00 AM #10
Ambassador
1,437,777
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

That's an incredible difference in the final appraisal price. The first appraiser needs to go back to school - or retire from his profession. The bottom line - you knew something wasn't right and turned it around into a positive outcome. Nice job, Paula. D 

Jan 13, 2018 06:42 AM #11
Rainmaker
775,322
Carol Williams
U.S.: I specialize in helping agents who have been in the business 2 years or less create a thriving business. - Wenatchee, WA
"Customized Mentoring & Marketing Services"

Hi Paula,  Sounds like the first appraiser was too darn lazy to do a new appraisal and just just changed the date and sent his invoice.   So glad it had a happy ending.

Jan 13, 2018 11:16 AM #12
Rainmaker
1,115,305
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

So frustrating to hear a story such as yours, Paula McDonald ... as I was an Appraiser for well over 25 years.  Every professional contributing to a transaction needs to keep an open mind, consider options, and work to facilitate the transaction as best as possible.  Seems the 1st Appraiser missed the mark completely ...

Gene

Jan 15, 2018 10:05 AM #13
Rainmaker
1,089,591
Paula McDonald
Magnolia Realty ~ Granbury - Granbury, TX
Magnolia Realty ~ Granbury, TX 936-203-0279

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi , thank you for your kind words and yes, so frustrating. I feel these buyers were ripped off of the $2,700 they paid for this terrible appraisal.

Jan 15, 2018 10:15 AM #14
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Magnolia Realty ~ Granbury, TX 936-203-0279
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