The sun is shining and the spring real estate market is here. We are definitely enjoying a seller’s market, and the time it takes to sell homes is much improved.
You’ve decided to sell your home, so you do all the things you need to get it ready for the market and select a Realtor®. You have always been very proud of your place, like most homeowners, and you probably like to think it’s worth more than it is, like most homeowners. The agent has done his homework, and says your home’s market value is $300,000, but you were certain it would be more than that, so you insist on asking $330,000. You might even say “let’s ask for $330,000 and see what happens”. The answer is usually “nothing”. Okay, I’ve heard the stories that in a land far, far away someone listed their house and had eighteen offers in a day, but that is not a normal market. Property normally sells for “market value”.
However, let’s say you find a pigeon that just can’t live anywhere but in your home, so he offers you full price. He is preapproved for a loan, and Camelot appears on the horizon. The inspection goes well, and the mortgage company sends out the appraiser. The appraiser turns in his report and says your home is worth $300,000. This is not good. The remedies to this either don’t work, or you won’t like them.
If you try to appeal the report, it usually falls on deaf ears. If the buyer tries to get a new appraisal, he will likely have to change lenders, and all that costs money. The chances of the buyer making up the difference with cash is slim, and may not be approved by the lender. If there is a substantial down payment, that could be reduced, but that still lowers the amount you receive. The only thing left is to lower your price to close the sale, or return the buyer’s earnest money and terminate the agreement. If you terminate, you will likely repeat the process all over again. It may not seem fair that in our country, two people can’t sit down and agree on what they think is a fair price, without all this rigmarole, but that’s how it works these days.
Remember, agents cannot do appraisals without an appraiser’s license, but they can provide a recommended market value. In cases where you don’t think your agent got a good read on the market, I would recommend you spend a few hundred dollars to get a quality appraisal completed. That will give you peace of mind that you are getting the full value for your home. You can also share the report with the appraiser who works for the lender, which gives him guidance on how the price was determined and helps him with his job. It also justifies the asking price to potential buyers.