What's Wrong with This House?
In recent months the real estate market has changed. Albeit for the better in most cases, but there is still some skepticism and some unrealistic expectations on all sides of the transaction. Yes, there are properties that go under contract quickly and are being sold above asking price, and yes in a lot of cases the house closes. However, not all houses are the same, even when located in the same market, so what worked for your neighbor may not work for you.
There are some problems that I see repeatedly. One is when the buyer makes an offer on a house and the house doesn’t appraise for the agreed upon purchase price. In many cases the seller only wants to sell at that contract price. The buyer sometimes assumes that if the house doesn’t appraise the seller will lower its price to make the sale. The buyer may lose costs expended in appraisal, title exam and inspection among other things if the seller refuses to lower the price. He may also lose the home of his dreams. The seller may lose the sale if the buyer cannot pay above appraisal. In this case no one wins.
It is important to have realistic expectations of a home’s appraisal value, whether you are the buyer or the seller, especially if the buyer is obtaining financing to purchase. As a seller, having a pre-appraisal prepared prior to listing can be money well spent and will provide you an in depth understanding of what the house will appraise for, not what someone is willing to offer. As a buyer, you want to protect your offer by making your contract contingent upon the appraisal.
If you are willing and able to make the transaction work no matter how the appraisal comes in, then you are that much closer to having a successful transaction. Experienced real estate agents can help the buyer and seller come to an agreed upon price (based on recent market information) that should be approved for financing so that all parties win. For those that want to go it alone, it can work, however you should be prepared to do a lot of homework and be willing rely on other professionals, whether it be an appraiser or an attorney or both to help achieve a successful sale.
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Lisa Glauber Shippel