What Happens When an Appraisal Comes in too Low During the Sale of your Home? – Secrets from the Eric Stewart Show
Eric Stewart ● August 10, 2017
We had a home for which we got a fantastic price. In fact, compared to the comps in the neighborhood it sold for $75-$80 thousand above the other listings! Our clients absolutely loved us. We sold the house in 8 days, and the location and the condition definitely warranted the demand and the interest. We have a system at the Eric Stewart Group.
We priced the property at $800,000, despite my feeling that the value of the home was $838,000. We took a different approach with this home by pricing it lower than the value I saw. When we placed the home on the market on Thursday, by Tuesday we had buyers willing to pay $825-$830 thousand. With two buyers so close, we ask them for their best and final offers without telling them what the other has offered. One buyer actually went up to $880,000! What a dream come true! It turned out to be a really great sale and a really great buyer.
I told my clients, though, that we weren’t out of the woods yet. We still had to go through the appraisal, and we knew it would be hard to get the appraisal to come in at the full sales price these buyers were willing to pay, $880,000. Though I wanted to, I couldn’t drive the contingency out of the contract, but I did my best to show the appraiser the value in the home. I met the appraiser. I wanted to be there while he was inspecting the home so that I could point out all of the value he might have missed. You hear me often quote Warren Buffett – “the price is what you pay, the value is what you get.” If you pay the price, even if it’s a high price, and the value is there, you’re not overpaying. This is my job as a listing agent – to sell the value that’s there to the best of my ability.
When the day of the appraisal come, I met the appraiser at the house. Turns out it was a gentleman who went to the same high school as me! We were a couple years different. It was nice to go to into the appraisal with some sort of camaraderie. I had a tough time finding comparables literally in the neighborhood for this home. I got my best comps a half a mile out of the neighborhood and gave them to the appraiser, and he came back and said that he appraised the home at $830,000.
Now the sellers didn’t want to go down to $830,000, and the buyers now didn’t want to go up to $880,000, but remember, I still had this other buyer who wanted the home. They were still contacting me, telling me “if anything falls through, I want to know about it..” and I was sure they’d go up. I used this competitive threat to negotiate the buyer up to $855,000 – halfway between the appraisal given and the agreed to sale price!
It was still a very, very good sale; my sellers were still extremely happy with the sale price of their home. The buyers got an amazing property and are the winners here, because they get to put their name on that mailbox.