A client just texted me asking how confident I was in his appraisal coming in at value. The appointment was the next day.
The selling client had already bought their replacement property. Things were proceeding smoothly with the inspection. We had to hash out a few buyer wants in the inspection process and then clear the appraisal, but in just a couple of days, it would be a green light to move on and start the next chapter of life.
But the remaining hurdle included an objective third-party opinion of his property’s value.
Stephen Covey famously spoke of the different orbits you face in the professional life. Namely, the things you control, and the things you can’t control. Then there’s that third unspoken circle, the circle which usually looks like things you think you can control, but really cannot. Appraisals fall into that loop. For being objective, heavily measured documents with so many standards, they’re so… subjective.
My reply to the seller was consistent with always-on contextualization of life’s complexities: when we negotiated the deal, it helped that I knew the lender doing the loan, becuase I knew that lender’s appraisal management office would send an appraiser who was fair. In this case, we drew an appraiser who in my opinion was more than fair, but one that I typically associated with coming in always at value if not slightly high. Relief number one.
My second point was that we didn’t have anything really weird in the negotiations. Buy “weird”, I mean consistent with what draws the headlines in today’s goofy market, we didn’t sell in merely 12 hours to the first person in, we didn’t have multiple offers with hard-to-enforce accelerator clauses, etc. We were on the market for a relatively brisk five weeks, we were thinking about a price reduction, and the buyers brother the sellers a very fair offer. It came together without a lot of drama and every one was happy. In a market like this, one of the worries about bidding wars that even though buyers determine market value, they are often times “determining that value” under duress of excess, abnormal competition. They feel forced to make a deal at a higher price. Therefore, reflected in their offer is an “I don’t care if it’s going to appraise. I don’t care if there is no precedent for that value.” Appraisers don’t read that as “proof that there is value.” They’re stewards of the lender’s money more than the buyer’s. Accelerator clauses are increasingly common, and will indicate that if the house does not appraise, that the buyer will pay X number of dollars more in cash to close the deal. But when the rubber meets the road, and that still buyer-friendly contract needs to be enforced, and the loan commitment date is still out there after the appraisal date, will that buyer really show up those extra $10,000, $20,000, $30,000? In this case, we were not in a bidding war. We had five weeks on market. The market showed up, the market made a very reasonable offer, and we had sales comparables bracketing our price higher and lower, smaller and larger, better and less quality. All the tools were there for the appraiser to do their job and conclude that the buyer would pay the proper value. Relief Number Two.
Then there was my third text back to the seller… And it’s my own personal reality. That personal reality that always sees context and complexity simultaneously.
I don’t feel like I’m doing my job unless I am walking the plank on the razor’s edge at the appraisal appointment. If it’s a slam dunk, what did I really do that was significant for the seller?
Personally, I love it when appraisals come in high… On my buy-sides. But not on my listing side. Sellers frankly may not care if the appraisal comes in high (the buyer I was with yesterday was happy for his buyers that the house appraised $6500 higher than the sales price), but I do care, possibly to my own self-damage. I wish I could’ve got my sellers extra money. It doesn’t happen frequently. Until I meet the appraiser, I tend to sweat it out.
Marketing your property means you have to sell it three times.
You have to sell it online to skeptical audience that is already upset that they’re paying so much for a house and have so few to look at. In that mindset, everything seems/feels over-priced. That “sale” results in foot traffic that generates a showing.
You have to sell it when the buyers come in the door: does the staging work, does the house smell right, are they feeling in which they can container their future? That’s the second sale.
Then there’s the third sale. The appraiser. Can they get to the value that’s likely the highest price ever-paid for such a home in that neighborhood given our present record-breaking market? If that appraisal does not come through, are the sellers’ hopes dashed? Is their next chapter now on written?
Advertising is sharing information about an existing product. Proper marketing begins at product concept and makes the whole idea of the product better. Sales is the act of providing persistent compelling evidence that brings a transaction to it’s logical conclusion, executing skill and care all along the way for the benefit of one party. The appraisal is sales in microcosm. How well the appraisal process is handled is a fantastic measure of how mutually tied to your success a real estate broker can be.