Wednesday, 25th of June 2008 at 08:00:08 AMI’m not trying to brag, in this case, too good was a bad thing. You see, I listed this property for the high end of the value range, it was in great shape, better than the other listings in the area. It was an entry level home, had all the appliances (new) and nicely remodeled, I paid to have it staged. In the 28 days that it was on the market, 13 agents viewed the home with clients, 2 returned, both of which made offers on the property. The first offer was too low with too many concessions and was rejected. The second one asked for down-payment assistance but was more than full listed price, at 28 days, I was happy, proud of this listing and offer.
All the agents gave positive feedback, showed well, stagedwell, it was a good listing. Hey, I even got calls from those driving by to see the home (not very common in this industry). So we open Escrow, go through Inspection, two minor things come up, we take care of those. Then comes the appraisal, not good, we get a second opinion, better, but still not close enough to cover the sales price.
I made some calls to my appraisers, and sure enough, they confirm that it won’t make offer price. I point out the comps that I used to help determine the price. You see, there was a sale of the exact same floor plan less than 6 months ago less than a mile away for a property in similar condition, fresh remodel, appliances all the things people that want to move in and not be bothered with would want. Same price as our asking price and close to our sales price. They can’t use that comparable, since that house sold til the time we went to get the apprisal, there have been a number of bank-owned and short sales completed that make up the majority of this sub-market. They killed the value for the neighborhood 15% in just 6 short months.
Of course I make the case that these homes are being sold in as-is condition, no repairs often needing repairs. The appliances and in some situations, the cabinets are missing. The landscaping can be described as a jungle, all of which makes them poor comparables for a property that has no headaches, can be moved right into and the new owner can be proud to own. No dice Craig, sorry, there are just too many of these properties that we can’t ignore them.
Okay, so now I go into over-time, refusing to take a loss so easily and start talking about how we’re killing the market if we can’t show that some properties are worth more than others based on care and quality. How are we going to get a recovery if we can’t start pushing the top of the price point up. Well, you would be if this property closed for what we suggest for the value, we’re giving you the top of the range that it is worth because it is in great shape, we just can’t exceed the range.
Okay, so I have a discussion with the clients and the buyer’s agent, not feeling all that great right now. I know the sellers can’t take the lower price and that the seller is “starting over” and can’t make up the difference. I don’t have a good answer to keep the two parties together. I’ve considered lease-option, but that won’t work out for reasons I’ll describe in another post.
The two parties have seperated to give thought to the next step, but I am predicting that the buyers will issue a cancellation notice for failure to get an apprisal for the full amount and the sellers will convert the home to a rental and hope for brighter days on the market later. We will know soon enough.
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The properties at the top end of the range, do not mean they are comparable. I find it ridiculous that a knowledgeable appraiser, is so afraid to reach a value on a home that, from your description, deserves the price.
Pychologically, you’re probably going to be unable to get the buyer’s back in the game, at the original sales price. That sucks!