Oh, but that little house was turned out the day it landed on the multiple listing service! The hardwood floors all scrubbed and polished. The smell of freshly cut lawn and bougainvillea greeting new arrivals as they stepped out of Mazda Miatas and Chevy Tahoes and Ford Fusions. The windows so crystal clear that the rogue speck of dirt eventually capitulated and moseyed along to a less lonesome locale. Everything was just so as you wooed prospective new owners.
You sold your home that very first weekend. Enchanted the buyers through your concerted efforts to distinguish a well-loved home from the abandoned dreams that haunt the competing bank-owned and short sale properties, you did. Bent on purchasing the best bargain on the block when their plane touched down at Sky Harbor, the nice relocating couple from South Dakota instead rationalized the higher price tag of your owner-occupied home against the great unknowns that plagued the lower cost, distressed property options. After several celebratory glasses of wine, they mentally recast the entire episode with your home starring as the greatest value proposition on the market.
It is now day 14 of the escrow period. The home inspection, a week in the rearview, couldn’t have gone any better. You were never all that concerned about it. You change the A/C filters regularly and have the units serviced semi-annually. You resealed the foam roof with elastomeric last May. You even placed a home warranty policy on the property prior to hitting the market to fend off any unexpected eventualities, you clever fella, you. Now, having agreed to correct the double tab at the main breaker box (damn landscapers), replace the faulty GFCI outlet at the pool equipment and fix the malfunctioning shower diverter valve in the hall bathroom, you let out a well-deserved sigh of relief. Knowing that you have an honest to goodness sale firmly in place, you turn your attention to other pressing matters that had been relegated to the back burner.
And the lawn grows a little taller as the mower doesn’t make it out of the shed this week. The carpet in the hall gets a little matted down from the higher than normal traffic and a missed date with the vacuum cleaner. Aside from little Johnny’s peanut butter fingerprints on the lower third of the living room picture window and the fogged up corner of the breakfast nook window by the doggy door, the glass is still pretty passable. The contents of your cabinets and drawers are strewn about the den and family room, but you have to break a few eggs to make a moving omelet, right? Besides, you already found your buyer. No more agents calling to pop in for a showing with ten minutes notice.
Thus begins the great unraveling of your sale. You see, in 2010, you do not just stage your home for potential buyers. Matter of fact, buyers don’t even possess the most discerning eyes that will take in your abode during the sale process. Nope, those hawkish peepers belong to a black-hatted professional who holds the fate of your transaction in his number-crunching hands.
Once you strike a deal, you better keep the joint gussied up for the appraisal, Jack.
Besieged by stringent regulations and menaced by fire-breathing underwriters, appraisers are no longer encouraged to hunt for validation of the accord reached on the open market by a willing buyer and seller. That’s so 2006. These days, the poor SOBs have more incentive to impugn a home’s value than defend it. This is not a knock on their collective competence, but an indictment of the constraints by which appraisers are currently bound. You counter this institutional bias with the same measures you employed to overcome the price objections of your buyer.
You have to resell the house.
Do not discount the human element in a supposedly objective endeavor. Consider the properties that most Real Estate appraisers spelunk on a daily basis. Bank repo after bank repo, the job should come with a snorkel and a mobile decontamination unit. Given the wide disparity in property condition in the market, the silver lining to cloudy times is an ability to add value to your home though no greater expense than meticulous housekeeping. It’s your agent’s job the sell the objective proof (most viable comparable sales, list of upgrades / features, comparisons between the subject property and comps, etc), and it’s your job to sell the mom, baseball and apple pie.
Clean and “not-jacked-up” is the new granite counter tops and travertine floors.
There may not be an input column in a uniform residential appraisal report for “not infested with hobos,” but latitude is given for affixing additional value based on conditional comparisons to the properties selected for the analysis. The dialed-in condition of your home will stand out in full bas relief against the tired housing din. It is especially critical if you don’t have all of the snazzy upgrades. You are relying on the impression of value for lack of more readily quantifiable measures.
Don’t give in to inertia prior to what has become the penultimate part of the escrow process. Treat the appraisal as a showing appointment instead of the contractual procedure that it is and you give yourself considerably better odds at a soft landing at the closing table with the same purchase price with which you began.
Scented candles, they aren’t just for buyers and third dates anymore.
Originally posted at the Scottsdale Property Shop
Your source for Scottsdale Real Estate since the dawn of time ... or thereabouts.
Launch your Scottsdale Home Search now!
Great post and so true. Wonder what the true percentage of properties being sold twice is.
So true that the appearance is more than just a sales tool.
Thanks for sharing your thoughts on this.
Margaret
Yep - light those candles, put some mood music on - maybe even some fresh baked cookies on the counter saying please help yourself!
Paul, this was one of the best written posts I have read since I have joined AR. I love your style of writing and also what you had to say. I think that is some of the best advice you can give your Sellers in this market....especially if the deal is a short sale where you do not know how long it will take. I am going to suggest this one and also re-blog! Bravo
Sadly, the contract is just the beginning of the tense ordeal of processing and getting to settlement. There are so many pitfalls these days, appraisals, underwriting, etc. there is nothing routine between listing and settlement.
Thanks for reading, gang. It is only human nature to let one's guard down once the deal is inked, but low appraisals kill deal after deal in my market. Though it has never been more difficult to bring the value in, it's never been easier to differentiate one's home from the pack. I give the appraiser the tour, hand him a package of comps/upgrades and try to sell him the house like he's my buyer. For the life of me, I can't fathom why so many listing agents (in my experience) fail to even show up for such a crucial juncture.
Very true, Lenn. Times were that navigating the home inspection process with the most difficult portion of the transaction, but it just serves as a warm-up these days. Appraisals and financing are no longer the foregone conclusion that they once were. We all need to up our games accordingly.
I've also suggested you for a feature Paul because this is good advice, plain and true. Whether it's the current market or any other, I don't think you can be too careful when it comes to such a big transaction.
Paul, As always, superbly written and with a valid point. We look forward to your new postings on our subscription list!
Thanks.
Liz & Bill - Much appreciated :)
Angela - True. If one cannot take anything for granted in the best of times, it is even more pressing now. Rather than bemoan the difficulties in the appraisal process, homeowners can exploit the advantage of their well cared for home versus the disrepair found in so much of the current inventory.
We had sellers who actually turned away showings after they got their offer. Whaaaat? Well, we felt that the buyers might be flakes, and they were. The inspection report went awry. Lots of reasons...inexperienced inspector, nervous nellie buyers...however, now the sellers sit with no one knocking on the door.
The inspector, the appraiser and the buyers want to see it in its shining glory. Don't let your guard down until the ink is dry on the closing docs.
A cautionary tale if I've ever heard one, Suzanne.
Oh you are so right on with this Paul. Appraisors need to be 'courted' and the house is the date! I like to keep them in the 'ever-ready' stage until it's closed closed closed!
You are right about allowing other buyers to continue to see the house until the inspection period, and I agree that the appraisal should be treated as a showing too! Great flow of your post makes it a delight to read! Well deserved feature, I hope that your target audience likes it too!
Paul, Great Post. Spot on too...better sell it at least twice!
Paul, Now that was a good read. I have followed the advice in your post and was rewarded well. Ditto on not turning away showings while I had offers at hand.
I wish I only had to have the house sell twice. I've had a house sell four times. Three deals dead and the last one in limbo as we wait for a mortgage commitment from a different lender that is sending out a new appraiser.
Brutal, Greg. My personal favorites are the ones that require two appraisals due to FHA scrutiny of recently sold properties (the anti-flip regulations may have been relaxed, but that does not mean the hairy eyeball treatment has gone away completely). Hard enough to navigate one, but two? Cruel and unusual.
Sorry to skip, folks. I've never been good at fielding and responding to compliments. Anna, Karen, John, Cynthia ... I thank you.
You and I are different. You would be great at writing novels. I am a 140 character person. Short and concise for me. Great post though.
Absolutely spot on, my dear. House stays 1st day show ready until it gets through inspection and appraisal. There's also the issue of the buyer needing to pop by to measure for drapery rods or have a contractor quote some "critical" 1st week project. Last time I sold my personal residence the buyer came by seven different times between contract and closing always with a "critical" (to him) measuring or paint color issue. He lurked, he was creepy. I know they were checking up to see if I was wrecking "their" house or was making off with the granite counter tops.
Nice writing....
Paul - ok, I must admit that I skimmed the middle and was wondering where you were going with all those adjectives but you won me right back with the last two lines. Anyone who can craft a post with a great point, a fantastic final line AND use the word penultimate is someone I'll read again! Thanks for a great post!
Trevor - I aspire to author the world's first 140 character novel.
Leslie - I've had similar experiences with returning buyer syndrome (RBS). I supply the creepy, however. ;)
Dee - You skimmed? I'm appalled. But empathetic. :)
Paul great post. It's almost harder to get the appraisal done than to sell the home in some cases.
Paul, Great post. Whether I am the listing agent or the buyer's agent I always meet the appraiser and provide them with information and data. My information is more current and differentiates the comps. The appraiser may use comps from last year and they are no longer local neighborhood appraisers. I bring them current signed contracts that I obtain from other agents. I tell them why the buyer chose this property above all others.
Banks are pushing for low appraisals, and often won't accept a second appraisal. I discuss the trend of low appraisals with both my buyers and sellers, so they don't panic when an appraisal comes in low. I prepare buyers to put more down to secure financing and I recommend to sellers not to allow financing or appraisal contingencies.
Interesting, Mitchell. Appraisers using year old comps? Here they won't look at anything older than 3 months nowadays. I am jealous that your market allows you to negotiate out the financing / appraisal contingencies of the contract. That would be transaction suicide in my market.
Just goes to show you that its not done until the fat lady sings. I'm still waiting for one of my listings to close.
Ain't it the truth!
And ain't is not in my vocabulary
even if it is in the dictionary.
You so eloquently stated what many of us are having to say in plain English on a daily basis.
BRAVO!
So far I've been fortunate ... but it's probably only a matter of time. Thanks for a great post!
"Penultimate" ... okay, that's a new one. Easy on the thesaurus and synapses, Slaybaugh.
And when you pen that 140 page novel, spam whatever social networking site I have still going with the link:)
The changes and/or obstacles are astounding these days. I've kept up with them even after leaving the asylum with one frontal lobe tied behind my back. The pendulum is so off course that Plan B is more akin to plan 'become a used car salesman and move in with ma and pa'. And it still doesn't make me miss the days when I competed with the broker down the street offering No-Doc Loans at fixed interest rates that were quoted using a popular golf term.
The underlying theme seems wise to me ... don't wait until the ink dries ... scurry when the wire hits and grab a quarter-pounder and fries. Or, just a hire a damn professional who knows what they are doing. The latter should have been the former all along.
Well I'm thankful that I've only had to deal with a hobo infestation once in my real estate career. Sad...but true.
I'm also thankful that appraisers out here seem to magically always land at contract price (all but once in the past two years anyway). Statistically improbable that the legal value is always the value the buyer and seller agree on, but the fact is that the value of a house is what a buyer and seller agree on.
Appraisers out here, no problems. Underwriters...well I don't talk about them...
That was the first 9 years of my career, Melina. Things have changed radically in the Valley of the Sun over the course of the past 2, however. The appraisal is far from the rubber stamp it once was. Dare I say, it is probably the leading saboteur of transactions in 2010. I'd actually like to see some research on that to see if my hunch is borne out by the data.
Glad to know Arizona is no different than Texas. Appraisals are no longer the slam dunk justification of the sale price.
It's good, it's the way it should always have been but we need to up the anti and educate our sellers.
:)
I agree to an extent, Jody. Too many appraisals are botched from out of area appraisers with little intimate knowledge of the subject area or from pressure to essentially cram down value (and subsequently minimize the bank's risk by lowering the ultimate loan value). While the target practice of the past was a bit of a joke in assigning value to match the purchase price, the draconian measures currently in place to stifle appreciation and fair market value is much too severe of a whiplash effect.
Paul - A valid point regarding the condition of the property during the appraisal. The sellers do need to have any "extra" they can get, and condition is very important.
For the first time in a long time I represented a buyer where the appraisal fell $15K short of the agreed to sales price. Both myself and the listing agent were concerned about the appraisal and were anxiously waiting for the results. When the appraisal was in, the $15K was just too much more for the seller to take. He was already selling short and was planning on bringing money to the table (he wasn't going to stiff the bank - noble of him!!!). While he knew he was going to write a check at the settlement table, the additional burden of the lower appraisal broke the deal. He simply either wouldn't or couldn't make up the difference.
Now he's stuck with an appraisal this appraisal. I reviewed the appraisal carefully and I couldn't find better comparable homes than the appraiser did. Condition wasn't the issue, nor was house keeping, it was simply an issue of finding comparable recent sales when there were few to choose from. While I think that the seller should have begged, borrowed and perhaps stoken the additional $15K to get the deal done (remember I was working for the buyers, not the seller), this appraisal has put this seller into deeper water than he thought. As the current market continues to slow, inventory levels continue to rise, they seller could be sinking deeper and deeper under water.
"so start churning out those verb heavy calls to action and stop fiddle f&^%$ng around with this high-brow fluff!"
Just stopped by to let you know my family had to administer oxygen after a laughing fit sent me into a spell of what the old timers sometime refer to as "the vapors" when I read your latest comment on Lenza's recent post...
No time for belly laughs, Russ! We've got reams and reams of duplicated content to churn out!
Good advice for today's sellers, especially those who are relying on their past expereince selling a home a few years ago. Today's seller cannot let their guard done for a second. The property needs to shine anytime and everytime the buyer or one of their "representatives" will visit or view the property.