Thursday, July 7, 2016
If you are even remotely interested in selling your home, I'm sure you've been told that now is the time... at least that is what I am telling all of my potential sellers. This market is absolutely on fire! My homes are going into contract anywhere from 24-48 hours after going on the market. But there is a reason for that! I price my homes right.
In a previous post I spoke about the importance of Market Value. Just because the market is hot doesn't mean that this information flies out the window. It still holds true. An appraiser is going to still look at what is happening in your neighborhood over the past 6 months and base your pricing off those comparables.
Here are a few facts that can help you out and get you prepared.
1.) The real estate agent is willing to put your house on the market for whatever price you are asking.
Though you might think this is a great idea at the moment, it could hurt you in the end. A great agent is going to provide you with a copy of the comparable homes in the market and let you see what everyone else's has been selling for in the past 6 months. If you are trying to sell it for more than what these numbers are, they shouldn't just go for it to get the listing. There should be conversation about trying this price for a set period of time and if you're not getting the showings from it that you are expecting then drop the price.
Here is a great article I found about this exact thing!
2.) I have put more into my house than what other neighbors have.
That's great, but make sure that what you put into your house are things that will actually increase the value of the home over others. Just adding new counter tops or replacing carpet will not get it in this market. It might make your home more appealing to buyers, but it isn't going to change an appraiser's mind on the price. Things that help could include items such as a finished basement, additional bathroom, fenced yard, etc.
3.) So I got an offer at the higher price, hahaha. Now what?
Now it is time for your agent to go to work. His / her job will be to educate the appraiser as to why your home is worth the price in the contract. The buyer's agent has already informed their client that if it doesn't appraise for the contract price that you are going to have to lower the price anyways. Your agent should meet the appraiser at the home (or at least leave information at your home for their visit) with details about the comparables that were used to price the home along with any additional updates that would be necessary for them to know in making their decision.
For example: I have a house listed at $5-10,000 over the market value for their neighborhood. Why would I do such a crazy thing? There was an addition put onto the house that increased the square footage over others. Updates to the home include new roof, hv/ac system, plumbing, electrical work, cement drive and a few others. The home has a full, sealed basement where only about half in the neighborhood do. And there is a 2 car detached garage, which is almost unheard of here. These are all legitimate reasons why it should be priced higher, and I will make sure that the appraiser knows about every single thing!
4. The appraisal came in lower than our contract price. What do I do now?
In real estate, this does happen some times. It can even happen when a home is not priced above others. But when it does happen, it becomes a negotiating time again. The buyer will only be able to get a loan for what the house appraised for. As for the difference, there are a couple different things that can happen. The buyer could bring cash to the closing. The seller could drop the price to meet the appraisal price. The buyer and seller could meet in the middle for the difference. The deal could end and you start all over again.
If the buyer was purchasing the home with an FHA loan, when you put the house back on the market again, anyone seeking to purchase your home with an FHA loan will have that same appraisal for the next 6 months. Let me repeat that. It will stay attached to your home for the next 6 months. The only way around that is to find a buyer buying with Cash or Conventional.
Don't let this discourage you from listing your house for sale. Things are moving and they are moving faster and for higher prices than they have in the past couple of years. Just don't set your expectations too high and be prepared to negotiate if the time comes. Happy Selling!