Did the Value Really Go Down That Much?

By
Real Estate Agent with RE/MAX United Real Estate

I've been around a few years - longer than some, not as long as a lot of others - and I usually do good CMAs with a fairly good take on the value of the home I want to list. I research the neighborhoods and compare amenities and square footage.  Sometimes, I'll even offer to have a real live appraiser come out on my dime it the Seller insists that their price is the correct price.

Yet, sometimes, I guess I'm a little off.  I've been working with a great client.  You know the type.  Friendly, Personable.  House that looks like Martha Stewart lives there. Great upgrades. Oh yeah, allows that you're the real estate professional and is willing to follow your advice. 

So I went an took the listing.  Priced it a tad high to begin with since that's what the Seller wanted.  He came down pretty quickly, though, when the showings were slim and the offers were none.  In fact, he came down pretty substantially.  Sure enough, a full price offer came in with the requisite Seller Credit to the Buyer written into the offer.

"No prob", says the Seller, "Let's do it".

The inspection phase reveals some defects so the Seller says, "Let's give them money, instead."  Of course, the buyers wanted more money but the Seller says, "Let's do it."

Now here comes the appraiser.  I'm chatting the guy up asking about his camera and the market and so on. He's telling me he's seeing prices come down which is fine with him since he thinks real estate got way over heated anyway and really had no metric for value other than real estate and yadda, yadda, yadda.  This guy was not only doing his appraisal thing he was on a crusade.

He makes his notes and takes his photos and then, WHAM, shows me comps that are well below the contract price. He tells me if I can find other comps he'll try to work with them.  Oh.  The comps I used two and half months ago to get this price.  No good. Sorry. Price coming down. Worthless. Go back to work.

The bottom line (and a low bottom it is) is that the appraisal came in $10,000 under contract price.  Ouch!  After $15,000 in closing help to the buyers. Ouch. And the guy is trying to buy another place.  So this makes things that much tighter.

The guy is motivated, though, and wants to sell and move.  So, he'll sign the Addendum for the new sales price. The house will settle.  But it's an interesting experience.  It seems you have to keep moving the price month-to-month in order to get a good appraisal.

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Ambassador
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Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

You have to price ahead of the curve in this market.  It is like shooting a moving target.

May 28, 2008 08:34 AM #1
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

That is really tough.  Now you just have to hope the buyer's underwriter doesn't have a bad day and ask for another appraisal.

May 28, 2008 08:46 AM #2
Rainer
135,795
Michael Shankman
Award Realty - Las Vegas, NV
Selling Las Vegas 702-498-3383

good post..the appraisers are the ones who kill the deal..you have to use comps that are fairly new-within 2 months...glad you had the perfect seller!!!

May 28, 2008 08:47 AM #3
Rainer
166,537
Ken Montville
RE/MAX United Real Estate - College Park, MD
The MD Suburbs of DC

Jim - I'm on board with that but how do you convince the Seller?

Lenn -- You're making me nervous!  At least, they didn't want a new roof.  :-)

Michael -- It seems like two months are all they're willing to do.  That's not a very long time.  It used to be home inspectors killing the deal.

May 28, 2008 09:28 AM #4
Rainer
185,291
Matthew Rosov
Amerisave Mortgage Corporation - Laurel, MD
Certified Mortgage Planning Specialist

yup - A lesson I am learning as well.  Making sure comps are recent and not even a month old. 

May 28, 2008 09:34 AM #5
Rainmaker
42,632
Teri Deane
RE/MAX 100 - Columbia, MD
Realtor, ABR, CRS, SFR - The Deane Team

Sure, but there are neighborhoods where the home sales are so flat you're lucky to find comps from 6 months ago.

Jun 04, 2008 02:26 PM #6
Rainer
24,091
Vanessa Plante-McDonald, MBA, REALTOR® - Cash Rebate to ALL My Buyers!
Bethel Equities, LLC - Laurel, MD

I just did a comparable report for a buyer and encounted the SAME thing!

Jun 04, 2008 04:26 PM #7
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Ken Montville

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