REAL ESTATE NEWS

Nov. 15, 2016

What Happens When an Appraisal Comes in Low

What Happens When a Home Doesn’t Appraise

 First and foremost a low appraisal does not mean that the appraiser didn’t like your home or you.  Never take an appraisal personally, as it is always just business!  Appraisers rarely care if the home is messy.  They are generally looking for the functionality of the home itself, and not the appearance.

 When appraisals come in low on the home you are buying, the transaction can go in one of really 3 directions:

 1)  The seller may reduce the price to the appraised value -  The good news is that the buyer may have just saved some cash off the purchase price of the home!  A low appraised value is always good leverage when renegotiating the price.  When you do finally come to an agreement an addendum to the purchase contract will be required to reduce the sales price to the appraised value.

 2)  The seller sticks to their guns - The real estate contracts generally don’t require the seller to have to sell the property for anything less than the contract price.  Most real estate contracts also include an appraisal contingency clause that allows the buyer to back out and get their earnest deposit back without recourse.  The bad news for the buyer in this event is that you’ve most likely already forked over a few hundred dollars for the appraisal and property inspection, and generally that is a sunk cost and non-refundable.

 Yes, the buyer can still purchase the property, however the buyer will have to make up the entire difference between the appraised value and the purchase price in cash in addition to any down payment needed.  Lenders typically will not lend anything above the appraised value.

 For Example:

 Contract Purchase Price:  $225,000

Appraised Value:  $200,000

Additional cash from buyer: $25,000

 3)  Meet somewhere in the middle - Sometimes the best way to handle this is to renegotiate the price and land somewhere between the appraised value and the contract purchase price.   Keep in mind that the buyer still has to come out of pocket the difference between the appraised value and the new contract price, just like in the example above.

 There is an unconventional fourth option:

 4)  Challenge the appraised value -

 In my 16 years in the industry I have only seen this work less than a handful of times.  Appraisers are human and do make mistakes, although the software they use make errors uncommon.  

 The only way to have an appraised value revised is to find comparable sales that strongly support a material change in a price adjustment.  A great example would be a home in the same neighborhood, with the same floor plan, the same exact square footage, and the same features and upgrades sold for more and was not considered in the original appraisal.  Many neighborhoods built in the last 20 years only have 4-5 different models, some are just mirror images of each other or have only slight variations in the exteriors.  These types of neighborhoods make it much easier to find your exact model that has sold recently.

 Your real estate professional should be able to give you a list of comparable homes he or she used when writing the original offer or initially putting the home for sale.  Rarely do agents “use their gut” when pricing a home, unless it is a very unique home, a custom build, or has unique features that add or subtract from the value.

 Remember - stay calm!!

Karl Freund
Designated Broker
Kenneth James Realty

 

 

 

 

Oct. 19, 2016

What to Consider When Relocating to a New Area

Relocating to a new area can become a troublesome and stressful situation for many. Countless individuals and families do not know what tangible and intangible factors they should consider when relocating.  However, this scenario can be easily mitigated by keeping certain items in mind. Here are some of the most important things to consider when relocating.

Things to Consider

? Location: Before you move, take in mind what you like and don't like about the location you currently live. There should be a few things that you are able to pinpoint in your current location that you most definitely need in your next location and several things you could do without…

Those are important to know! A critical foundation for some individuals is security. Many families want to ensure that wherever they plan to move that living in a safe community is a top priority. More times than not, families tend to overlook the crime rate in a certain area and are often disappointed and seemingly too late when they do find out. You'll likewise need to consider the climate. Discover what the atmosphere is, and how it suits your liking for warm or cool temperatures. Depending upon if you are an outdoorsman or just love to enjoy day after day inside, considering the weather is a major factor. A few other potential thoughts to consider would be entertainment and recreational choices, restaurants, public attractions and job growth.

? Cost of Living: The cost of living is one factor that brings upon hesitation in the minds of many when house hunting. The cost of home protection such as mortgage and home insurance are major expenses and should become a prime factor when looking where to purchase. Other variables included in the cost of living are future job prospects and basic amenities such as groceries and security. All these costs may not sound like much or make a difference but when added up can make a considerable effect on your decision to relocate.

? Moving Expenses: One of the biggest costs associated with relocating is the price tag to move. When you contact movers, the cost may be more than you anticipate and act as a sudden jolt. Numerous companies offer smart deals that help families relocate from one area to another.  Ordinarily, there services include packing and unloading your belongings, and a few businesses take care of setting up the belongings in the new house as instructed.

? Friends & Family: When you're single, it's quite easy to pick up and move to another city or country. However, when you have a family or children, the choice is more perplexing. In the event that you have a spouse, consider his or her occupation prospects. If he/she has a great job with considerable perks, benefits and potential for growth, it may not be the perfect time to move. If you have children, it is a smart decision to look into the surrounding school districts in your prospective area and vet out the best possible option for your children… they are the future.

 

All in all, relocating can be stressful feat for many but if you plan accordingly and consider the above factors, you should be able to somewhat enjoy the adventure!

People should keep in mind some very salient factors that could influence the decision to relocate. Without considering the above-mentioned guidelines, a decision to relocate could be an unfruitful one.

 

Logan Holle
Real Estate Advisor
602-463-6447

Posted in Buyer Advice
Oct. 7, 2016

4 Things Homeowners Should Consider Before Trying to Sell FSBO

4 Things Homeowners Should Consider Before Trying to Sell FSBO

Everyone knows the saying, ‘there’s an app for everything.’ This is even true for selling homes. With apps like Zillow, Redfin, Realtor.com and Trulia on the market, more homeowners are attempting to sell their own homes by cutting out the real estate agent. While this may seem like it’s saving the seller money, in the long run, it won’t and it’s actually much easier and more beneficial to work with a real estate professional instead of putting the home up FSBO (For Sale By Owner).

 

1. Price matters. This is a mistake that is commonly made by sellers trying to market their home FSBO – the homeowner will overprice the home, thinking that it is worth more than it actually is resulting in an exhausted listing that no homebuyer is excited to view. On the flip side of that, some homeowners undervalue their homes and end up trying to sell them for much less than they are actually worth. This typically happens because homeowners don’t have access to the information regarding market data and comparable homes in the neighborhood that real estate professionals do. Hiring an agent can mean getting the value that the home is actually worth instead of trying to price the property themselves and ending up with money left on the table.

 

2. Marketing matters. It may seem to a seller like they are getting the proper exposure needed by posting to Zillow, Trulia, Redfin, Craigslist and in some cases paying a small fee to add it to the MLS (Multiple Listing Service) feed but in reality that is not full exposure. In today’s world, we are glued to our mobile devices and spend more than enough time on Social Media outlets. By having your property marketed to a highly targeted audience on social media, it guarantees a certain number of views and exposure to your specific property. Not only that but in most cases Real Estate teams market far more than the traditional For Sale By Owner through time-tested advertising means such as direct mail, print advertising, online ad space, cold-calling neighbors to bring awareness and ultimately a full-time professional working day-in and day-out to ensure your needs are taken care of. All in all, the more marketing and targeted reach the property is exposed to the better the chances are for an owner to sell the home for its true value (or a little more)!

 

3. Paperwork matters. To obtain top dollar for your home there is typically a lot of paperwork and negotiation involved with the sale and purchase of a new home. No one wants to feel like they are selling themselves short. Both the buyer and seller should walk away from the transaction feeling like they gained something rather than lost something. In a lot of cases with FSBO, someone walks away from the deal unhappy and for various reasons are not able to refute it later because they did not fill out the correct paperwork, or they hadn’t filled it out correctly. Real estate agents understand and study the in’s and out’s of all contractual agreements during the transaction to ensure the best possible result for their client. More often than not, homeowners that sell for sale by owner find that it becomes extremely time consuming resulting in an eerie feeling of uncertainty about whether they are representing themselves correctly or not.

 

4. Legal matters. For about the same reason as the paperwork but diving a little more in depth would be that if something DOES go wrong with the transaction, homeowners want to be sure that they have the necessary knowledge and papers completed to handle the situation amicably before it becomes a legal matter. Real estate agents make certain that all paperwork is filled out correctly ensuring the security of their client before anything becomes a legal issue for either party involved.

-- Logan Holle

Logan Holle is a real estate agent that specializes in Phoenix area real estate. 

Posted in For Sale By Owner