I have a home in Northview Place in Kansas City North that was custom built by my sellers. They used a great builder and took one of his floor plans, then maxed it out with everything - granite, Wolf appliances, custom finishes, tons of trim, landscaping, security systems. You name it; it's in this home.
Anyway, it’s been a somewhat challenging sale over the course of the last year, but we started at what they had in it around $440,000. At the time there were 2 other homes priced higher than ours in the subdivision. The seller is a doctor and moved to St. Joseph MO to take a partnership at the hospital there. They’ve been wonderful to work with and I’ve been disappointed that we’ve had to drop the price down to $390,000 to find a buyer.
We’re under contract at $387,000 and the seller is bringing around $20,000 to the table to get it done, but is willing to do that. This last week we got the appraisal back and it came in at $370,000 - $17,000 UNDER our sales price! Honestly, I wanted to be sick, but I’m the type to take 10 minutes to cool off, then dive in there and figure out a plan.
Long story, short – I think we have a worst case scenario plan in place and a best case scenario in place, but more importantly the buyers are not freaking out and still want to buy the home. I'm probably lucky there isn't another agent involved (buyers were unrepresented) because it sure makes it a lot easier to talk to them in person without another agent in there.
When I went over there to speak with the buyers at their home, as soon as we sat down at their kitchen table, the wife said, "Ron, before we get started, can I say something first"? I thought to myself, "Oh no, they're nervous and want to back out,” but then she surprised me. She said, "We LOVE this home and we want it bad. We've seen quite a few homes before this one and we simply do not understand how this appraisal came in so low. We don't believe the appraisal can be correct because we're 100% sure this home is a fantastic deal at our agreed price, but the bank is telling us they won't loan us the money and can't change the appraisal. How can we make this work because we don't want to lose this home?”
Obviously I breathed a huge sigh of relief and then began to explain my plans for a best case and a worst-case scenario. I told them sometimes the lender will allow us to contest the appraisal, but in this particular case it appeared to me that their lender didn’t care to discuss it. I suggested we simply start over with another lender and that’s what they’re doing.
As I asked around my office this week, I heard other horror stories of buyers that backed out completely, sellers that took their homes off the market, and deals that were killed even though we had a buyer willing to pay what they felt was “fair market value”.
Think about how many people are involved in this and how it’s a lose-lose situation. You typically have two agents, a lender, a buyer, and a seller at minimum; that’s five people, but you may also have that many people involved again if the sellers were going to buy another home in that same area.
As I told this story to several people in my office this week, I realized that this is MADNESS and where does it stop? Believe me, I do understand how we got to this point, but it just seems like there’s got to be a better way.
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