15 Dec You’ll Clip Coupons, Compare Prices For Milk… what about home buying?
Over the last 8 years I’ve worked hundreds of buyers. Not one time did the house we were submitting an offer on not meet appraisal. Not once. When a Listing Agent puts a house on the market they are not only expected to advise on a practical listing price, but they are required, per the Realtor Code of Ethics, to not mislead the seller about the value of the home.
Over the last few years the appraisal process and how it’s originated has changed. The laws now require the lender to order the appraisal through a management company which then randomly selects its appraiser. True to the word, not all appraisers are created “equal.” Unfortunately you have appraisers that do poor jobs assessing the value of homes in markets they are not at all familiar with. This disconnected and unseasoned appraiser can kill a transaction, especially in a market where comparable sales are hard to find.
In other words, list your home for a price that makes sense. Be able to defend, support and substantiate your list price. Gone are the days of listing your property 5-10% above the most recent comps in hopes some ding-dong buyer wouldn’t notice that their appraisal report had comparable sales from a completely different neighborhood.
I’d like to think that most buyer’s agents are reviewing the comparable sales carefully. Just because a buyer “want’s a house badly” doesn’t mean the buyer should be over paying. It’s the duty of a buyer’s agent to notify their buyer that the property is priced high and that it may not hit appraisal. No seller is required to sell their home if the property doesn’t meet the appraisers valuation. I think there’s this misconception that the seller is contractually required to “drop their price” if the property doesn’t appraise. That’s not so.
Before I show any house I view the comps. There’s this notion that this takes way too much time and is an impractical way of running a real estate business. Not for me. I despise wasting gas, driving in circles and looking at houses my buyer can’t buy! It takes under 2 minutes to pull and glance at comps for any one particular home. When a buyer decides to buy a home, the process is certainly longer and more detailed. Kind of like dinner. You can grab fast food or you can prepare a meal.
If a home is listed at 200k and the comps are in the 160k range then you know that you are wasting YOUR time AND the buyer’s time even looking at this stupid house.
- The seller is upside down and cannot afford to list for less. They are either on drugs or they bumped their head if they think they’re going to get lucky and find a cash buyer who won’t order an appraisal and who also won’t look at comparable sales.
- The litsing agent didn’t have the guts to advise the seller correctly. They were afraid they wouldn’t get the listing and fluffed the initial value at the presentation.
- The seller is a year or more out from selling. They’re listing high now because they don’t really have to sell, “yet.”
We could come up with scenarios all day long as to why people over list their home. It doesn’t matter. What matters is making sure you know what you’re looking at before you jump in the car.
People clip coupons and will research the price of a gallon of milk before going to the store, why won’t they demand this for each home they view?
Again, it’ doesn’t take hours to perform this simple task. Imagine the time that’s saved versus driving around.