You have an accepted offer. Now, commence holding your breath while you wait for the appraisal…
(Scary music plays in the background….) Dun dun daaahhhhhh…..
We had two deals terminate JUST today. Accepted offers rolling toward the closing gates but the buyer cannot get a loan on a property if the appraiser doesn’t say it’s worth what the buyer would like to borrow. This makes sense… lending money can be risky business, so lenders have to exercise some caution.
There is a lot of time and energy (not to mention emotion and excitement) that goes into the sale or purchase of a home. How can we all avoid spinning our wheels and experiencing this frustration? The seller, the buyer, the agent, the mortgage broker, the lender, the title and escrow company, and yes, that darn appraiser… (We can blame them right?)
Know your market values. Study how your property fits into the trends in the area.
Just because somebody is willing to pay list price for something, doesn’t mean they can get a loan on it.
(No, those were the old days that got us into the mess we’re currently in.)
I’ve heard the statement “a property is worth what somebody is willing to pay for it.” This is true if you are working with a cash buyer. There are a lot of those right now but limiting yourself to only cash buyers is probably not the best marketing move.
Enlist the help of your title company. We have access to ALL sales, including FSBOs. We can add a custom geographic search and parameters. Then we analyze the averages in the area by bedroom count, by market assessed value %, by subdivision, etc. All of this information can be translated into a one page Property Sale Analysis that shows you how the property fits into the trends in the area.
It’s a useful tool for the listing agent, a buyer’s agent making an offer, and also for a lender who is trying to wrap their head around the numbers coming in from the appraiser. This analysis (added to your professional assessment of the property) will either confirm the appraisers position or add some additional data to consider.
Educate your seller and buyer. If they don’t go through this process every day like we do they may be surprised to learn that no, they cannot sell their home (or buy a home) for more that it is “worth” if they expect a loan to be involved.
Share all of your market value knowledge with the buyers and sellers so they know what to expect. If that signed agreement is $10,000 or $25,000 over what the appraiser feels it’s worth, there’s going to have to be some negotiating (with Mr. Seller) or that deal is not going to happen. Perhaps sharing some math with your seller will convince them that if they actually want to sell their house, coming down in the price might be the best bet for them. We are also dealing with many sellers who are borrowed out to the max and they just cannot budge on their price. Sad reality – staying put may be their only option.
We are living in challenging times. Hard work, market value knowledge, and caring compassion for all of our clients are tickets to successful transactions. We are in an exciting industry and at the end of the day – we all hope to hear those magic words – “funded and recorded.”