In a recent sale I was part of, I represented the Buyers, who fell in love with a home in a fairly new area. At the time our search commenced, there were 7 listings in this neighborhood. The most recent comp I could find was over 1 year old, and expanded my search area wide to include homes of similar size and age. After doing this I informed my clients that the home they were in love with, was grossly over priced @ $280k Down from $295k. I told them I believed the home should sell for between $242k and $250K. They of course were amazed after I shared with them how I arrived at such an apparent deal.
Needless to say the sellers and their agent were taken aback by out initial offer of $245k. The agent even went so far as to tell me she had a 1year old appraisal (Go figure) that supported her price. When I asked for "SOLD COMPS" the story was much different. The other listings in the nieghborhood were just as crazy high as this home and some much higher. The agent then spoke with our local "MAKE ANY DEAL WORK" appraise and he justified her price. After 3 rounds of going back and forth on the price, I advised my clients to accept the last one, Somewhere around $265k, and wrote in a provision in our final counter, that "IF THE HOME DOES NOT APPRAISE SELLERS WILL REIMBURSE PURCHASER FOR THE COST OF THE APPRAISAL" Well much to the seller's surprise the home appraised at $240K.
The selling agent then called for another appraisal which the lender stated, "They can get 5 appraisals, we are only going to honor the one we ordered" My clients then agreed to pay 5k over the appraisal price and everyone was fairly happy. At the closing the seller, (Whom was very resistant to reason throughout the whole process) Pointed out to his wife, that the reduced commission the two agents received was way too much money. I chuckled when I heard this, since he beat up the sellers up on the home he was purchasing. I also learned that he had to remove a large bee hive from one of the walls and that cost him $1800.00.
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