Lets face it. In this market prices are spiking. Sellers are reaching for the moon on prices. Bidding wars are common!
When we sit down with a lot of sellers, and one of the most common questions that we get is “What are our options if the property does not appraise”?
Well, in such situation these are your options:
- Option one: Lower price to appraised value.
- Option two: Just Say NO! After all you never have to sell your home if the price is not acceptable to you.
- Option three: Buyer to make up difference in cash.
- Option four: Negotiate a price in between that you both can live with.
Now lets talk about the elephant in the room: Buyers bidding over your properties value.
We see buyers and agents all the time trying to get a contract by making a really high or unrealistic offer and then, weeks later they wait and see if the appraisal comes in low or try to renegotiate the sales price based on the repairs, and then they figure because they are the only viable buyer at that time that the sellers are at a disadvantage and they can renegotiate a lower sales price.
On our Team – we look a value many times: First when meeting with sellers, then again just before we go on MLS, a third time while presenting offers, and a fourth at appraisal when we offer to provide comps for the appraiser.
After all we want to make sure that they have the best information available right?
We also make sure to check the buyers financials before accepting an offer in order to make sure that they have the money to cover an appraisal gap if we run into one. Then we pre-negotiate that they will pay this gap whatever it may be before accepting an offer.
What can be done if the appraisal comes in low?
Low VA, FHA and conventional appraisals can be challenged should you choose to do so. Pricing it right and communication with appraisers is important.
Again the work that your agent does for you in the negotiation process is critical here.
We at The Smith Team – Your Home Sold Guaranteed Realty:
- Offer appraisal guarantees. We guarantee you to get paid the price that the buyers agreed to pay regardless of the appraisal, or we will pay you the difference in cash at closing!
- Offer a Your Home Sold Guarantee! That simply says your home sold at the price we agree upon or we will buy it from you guaranteed!
Here are some tips and tricks when getting ready to sell your home to avoid appraisal issues:
- Price realistically NOT optimistically. Look at similar recent and active sales.
- Condition is big:
- Remember, it’s an opinion of value
- Make the house look nice for the appraiser’s visit. we tell our clients to have the property in “show ready condition.”
- We provide similar sales and tell them about improvements upgrades and what we feel ads value to the home!
Appraisers will often add repair requests which will require a second visit form the appraiser to avoid these things consider the list below and see if your home needs any of these repairs.
Some typical appraiser repair requests include:
- FHA and VA Loans:
- Peeling paint.
- Missing outlet covers.
- Safety issues.
- Window well covers.
- Broken windows.
- Conventional Loans:
- Any safety issues.
- Similar sales looking backwards at historical sales.
- Adjust for a rising market.
- Market demand is higher than appraiser’s adjustments.
The key to getting this right: Hiring a great agent that know the market, the market trends, how to pick similar sales and communicates it well to all involved parties.
All loans in California require that the water heater be double strapped and that there are smoke detectors and carbon monoxide detectors installed properly in the home.
For a copy of our 100% of Asking Price Guarantee Certificate, or for a free market analysis, please call us 714-406-1414.