There is a lot of nervousness these days getting past the appraisal contingency, which is one of several things that a real estate contract usually hinges on when a purchaser requires a loan. The contracts typically most susceptible are those from FHA and VA buyers, as these buyers many times can, and do offer more than the listing price, and the appraiser tends to scrutinize the property much more. These loans require the least amount of down payment, with the VA requiring zero down. A higher priced offer, over the list price, excites a seller as they see dollar signs, while a savvy agent knows that it must first get through the appraisal hurdle, or else the deal falls apart, or the seller has to lower the purchase price to the appraised value. Many times an agent will meet the appraiser at the property in an attempt to educate, enlighten, or justify the contract price using comparative listings and sold properties, as well as showing and detailing improvements, etc. Some times this is helpful when done with tact, while other times it just annoys and ticks the appraiser off. I typically just want to make sure that the appraiser is local and familiar with the area. Homes that border neighborhoods and dividing lines can be tricky if the appraiser is unaware of these boundaries, which a map does not show.
I am currently listing a home and in contract with a VA purchaser. I felt that we priced the home fairly, in the sweet spot of the market. We ended up getting two offers within a few weeks and settled in on one that was about $3000 under asking price. All the inspections went well with no issues. The appraiser called to let me know that the value would be coming in below the contract price, but wanted to give me an opportunity (known as “The Tide Water Process” only for VA loans) to submit my own findings and comparative sales. I thought this was courteous, however, in our conversation he made it clear that he takes his job very seriously, and that he’s hardly ever wrong. I interpreted that as, “go ahead and knock yourself out, but I’m not changing the value.” I proceeded to send him the comps and a write-up as to the value of the home, including upgrades and details he may have missed. Also I asked the question, “What other house can the buyer purchase in this area for the same price that is similar, where they can keep their kids in the same school” (which I knew was one of the buyer’s objectives).
End result: The appraisal came in at the list price, $3000 over the contract price. Go figure. Seller is getting his money’s worth by hiring me.
Lesson learned: Never give up. Decent writing can go a long way.
Anyone else have experiences, good or bad with appraisers and appraisals?
Keith Klassen, Broker
Posted in Real Estate, The Sacramento Real Estate Market, Valuable Information
Tagged Adventures in Real Estate, advice, Appraisal, Buyer, buyers, California Real Estate, Curtis Park, Development, First time home buyer, Midtown, Real Estate, Real Estate market, Real Estate Trends, Realtor, Sacramento Real Estate
As a Curtis Park resident, I’ve been following the most recent news on the Curtis Park Village development – here’s a recent piece that goes a little beyond our Viewpoint news.
I caught a news piece this morning while at the gym. The title was something like the one above. The segment dealt with the question, Do energy efficient upgrades in a home make a difference in the sale price? Even with long-term energy savings, the short and resounding answer was, “NO.” While it makes all the difference for the environment, the sale prices do not reflect the upgrades, whether it be solar, added insulation, dual flush toilets, Energy Star appliances, etc. The target then got pinned on appraisers. They bluntly said that it was the appraisers fault… [paraphrased] The appraisers are behind the curve on this one. It’s the appraisers that have not gotten up to speed and are not giving correct value to these items. When an appraiser sees a furnace, whether it’s energy efficient or not, they just see a furnace…”
Now I have friends that are appraisers that will read this and have an acid reflex response (a little sour taste in their mouth). And I know theses appraisers do know the difference and can spot energy efficient systems.
I would love a response/rebuttal from the appraisal world. Sound off.
And don’t kill/hate the messenger – I’m just reiterating what I saw on the news this morning.
Keith Klassen – Real Estate Broker
Posted in Real Estate
Tagged Adventures in Real Estate, Appraisal, Buyer, California Real Estate, energy efficient, First time home buyer, Green, news, Real Estate, Real Estate market, Real Estate Trends, Realtor
Welcome to 5761 Sampson Way.
This house has been renewed… all you will need to do is move in (and plant a garden in the humongous backyard).
This home has been painted inside and out. There are new doors (including security doors), new trim, new carpet and tile flooring. The kitchen and bathrooms have been renovated and upgraded. Check out the granite-slab counter tops and recessed lighting.
Just to mention a few more of the many upgrades – New central heat and air units, new landscaping, and newly pour concrete driveway (these costs and really add up).
You get all this for under $100,000. That’s only about $775.00 per month in housing payments, which is less than you’d pay to rent this house! We have more for sale like this.
Keith Klassen – Real Estate Broker