Ozaukee & Washington County Real Estate: Oh, That Darn Appraisal

Find out more about Ozaukee and Washington County real estate, including the cities of Grafton, Belgium, Cedarburg, West Bend, Jackson and Germantown.

Oh, That Darn Appraisal

appraisal

It was the picture-perfect deal. The buyer found his first home, and he was bubbling over with excitement. The seller had an offer to feel good about. Inspection was done. A few repairs were requested. And the repairs were made.

But then the call came. Appraisal came in low.

That one always stings. Doesn't matter if it comes in just a couple thousand under the purchase price or several thousand under. Someone is telling the seller that their house is not worth what the buyer is willing to pay. Ouch.

Even with the most accurate comps and proper adjustments for improvements, it is still difficult to digest this information. But as the listing agent, part of my job is to help my seller understand what could happen if this buyer walks and we start over from square one.

  • More comparable homes could sell in the meantime at even lower prices than the comps in the current appraisal, which would drive down the value of their home even more.
  • If they've already moved out of the home, their carrying costs continue, sucking more money out of their pocket.
  • Even if the next offer is higher than the current one (which is pretty rare), the house still has to appraise (assuming there is an appraisal contingency, which there more than likely will be).

It's a tough market, but it is what it is. Even though we've seen appraisal issues more frequently during these tough times the past few years, it is never easy to have this difficult conversation with the seller.

To create any sort of false hope for a higher appraisal and not be upfront with them about the realities, is to provide a disservice to someone who has put their trust in my expertise. Being upfront and honest is what they need to help them make the most educated decision about how to proceed.

 

Originally posted at http://peggywester.com/appraisal-falls-short-ozaukee-washington-county-real-estate/

 

 

 

Peggy Wester
Phone: 262-370-1757
Email: pwester@realtyexecutives.com
Website: peggywester.com
Blog: peggysblog.com


Peggy Wester - Realty Executives Integrity

Comment balloon 7 commentsPeggy Wester • February 22 2013 05:35PM

Comments

I know what you mean Peggy.   We just had an appraisal issue on a transaction where I am representing the buyer.  Luckily we got the appraiser to adjust his estimate a bit higher based on some comps I found that he overlooked AND the buyer and seller were willing to meet in the middle to make up the difference.  I always warn my sellers though about the appraisal.  It's come up a few times over the past year or so.  Good post and best of luck to you.

Posted by Jerry Murphy, CRS, SRES, Anthem, Phoenix, and Scottsdale AZ Real Estate (Long Realty West Valley) almost 7 years ago

I have found it very helpful to do the CMA just before wiritng the offer and usually the comps reflect the current value within a very close margin.  The pending sales help but until they close, and the selling price is revealed you cannot rely on them as a true indication of median or average prices in your area.  It is best to be co0nservative both when listing or acting as a buyer's rep and crossing your fingers doesn't hurt either!  Good Luck, sell well.

 

Posted by Allison Stewart, St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904 (St.Cloud Homes ) almost 7 years ago

Jerry -- You're lucky you got your appraiser to make that adjustment; we tried that on a deal last year where she clearly missed some comps but were unsuccessful in getting her to make any modifications. The one we ran into this week was a different story. This appraiser was clearly spot on, and it was a tough, tough pill for the seller to swallow. Can't help but feel for her, but you have to help them understand that is what the market currently is. Fortunately, we were able to keep this one together.

Allison -- I agree. I am constantly providing sellers with market updates so they can see where they stand with their competition and with anything that has recently sold. So important to be upfront and honest with what is happening in their market so we can hopefully any surprises when it comes to appraisal time.

Posted by Peggy Wester, Real Estate Agent Ozaukee & Washington County (Realty Executives Integrity) almost 7 years ago

Nope until the market is turned and prices are seriously jumping it's best the lower the price to the appraised value and just move on.  And yes, I have felt for sellers in that same situation.  Closed one like that today where sellers brought a huge chuck of money to the closing, but now they can move on.

Posted by Tammy Lankford,, Broker GA Lake Sinclair/Eatonton/Milledgeville (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) almost 7 years ago

And as you know, Peggy, as do everyone else who is read your post and who has been a Realtor for more than 24 hours, this is the most perplexing problem of all.

If we assume the appraiser is the final authority, we crash and burn because our own professional market analysis didn't stand the test.

To honor my long standing reputation as a coward, I usually tell listing clients that since my job is to do my best to get the most for their home, occasionally the appraiser will take issue with my pricing, and that if that happens in their case, like all others, the appraiser wins.

 

Posted by BILL CHERRY, Broker & Wealth Coach (Bill Cherry, Realtor) almost 7 years ago

Just another reminder that the banks are still calling the shots!

A house I sold had to appraise even though the seller was paying 80% cash. The appraiser said in the past they would have just done a drive by to make sure there was a house on the lot but not anymore. 

 

Posted by Tessa Skeens, Staging For Realtors, Builders & Investors (Hampton ReDesign, Home Staging and Redesign ) almost 7 years ago

Tammy -- We are closing in 4-1/2 hours, and the seller is so relieved. It is incredibly tough to see someone bring a check in this amount to closing, but I think for her, it is worth it to be able to move on.

Bill -- It has been an interesting journey on this one for sure. The appraiser won for sure, but the seller is ready to let go and move on. A bittersweet end to this deal.

Tessa -- Yikes...times have changed, haven't they? Wow...

Posted by Peggy Wester, Real Estate Agent Ozaukee & Washington County (Realty Executives Integrity) almost 7 years ago

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