Appraisals are top of every listing agent’s mind in the frenzied seller’s market that all of Northern Virginia,mm and most of the country, is experiencing in 2021. Homes, even listed for reasonable prices, inevitably get bid up seven to ten percent of list price on average. A lot of times, it is even higher than that.
Most savvy listing agents are advising their sellers about sky high offers with appraisal contingencies. Those offers are only going to be as good as the appraised value. It’s a number meant to make a seller say yes, without thinking of the ramifications of low appraised value.
The way that buyers are getting sky high offers accepted is by waiving appraisal all together, or by offering low appraisal guarantees. Back to the practices of savvy listing agents, those are the ones that understand the importance of appraisal coming in as close to that offer price as possible. A buyer can feel immediate remorse if they are shelling out tens of thousands of dollars just to make up for a short fall in appraised value. So meeting the appraiser is critically important.
Knowing the appraisal process, as taught to me by an actual appraiser when I studied for my broker’s license, I know what they have access to, what paperwork they get and what they are looking for when they are putting together a report. It is astounding how many agents don’t. Some think that if they just raise the list price to the offer price after the contract is ratified, it helps with appraisal. Not in the least. In fact, it may hurt your seller if that deal falls through and the entire MLS service area now knows exactly how much your seller had. They may come in slightly below once you hit the market again. They sure aren’t coming in over.
Appraisers are members of the MLS. They can see what we do to listings. They can see original list prices and the changes we make and when. They get copies of the sales contract itself. They know what the buyers have offered. Finally, they don’t care about your list price. They don’t care about the neighbor’s list price. They care about recent sales in the neighborhood. Sometimes, they care about pending sales. They also care about seeing the multiple offers on the property, as that is a demonstration of what the market thought the value was. Really important, they like seeing a list of major updates by year, going back at least five years, no more seven or eight. Let’s face it, an HVAC isn’t new just because it isn’t original.
Changing list price to reflect the contracted sales price is a poor business practice. It tells the world what the seller accepted before the deal is done. That’s a big no-no in real estate. And since the appraiser has a copy of the contract, it is truly pointless.
What’s the practice of the listing agent you have in mind to sell your home? Might want to make sure you are working with a listing agent that understands the appraisal process and won’t compromise your negotiating position if your first buyer gets sudden remorse. Take a look at my service areas to the right on the chalkboard and let me know if you would like my expertise on your side to get you those multiple offers, keep a buyer in a deal and never compromise your negotiating power.
On November 19th (2020,) after months of planning with the seller, I was pleased to introduce 14455 Gringsby Court to the market. The need for the advance planning was simple. The seller was renting out the property, which had been her first home purchase. While she had wanted to get out of being a landlord years earlier, the market had not lifted the value to a point where it made sense to liquidate the asset until this year.
Whenever a landlord-seller lists their rental property, there is anxiety about how long it will be vacant while waiting for a buyer. Some landlord-sellers, despite the advise to list when the property is vacant that many years of selling residential property has given me, ignore it. They panic over the vacancy rate and having to pay the mortgage without rental income. THANK GOODNESS, the seller of this Newgate townhouse understood that short term pain equals long term gain. Sure, you can list a home while a tenant is still living in it, but they have no incentive to keep the home neat and show ready, or to comply with showing requests. Furthermore, with the seller’s market of 2020, it was unlikely this home would be on the market longer than a week. In reality, what took longer was the preparation that took place AFTER the tenant left, which included installing new carpet, having the whole home painted and some maintenance issues addressed. The home was also staged by me for professional photography. Preparation took two and a half weeks.
The home ended up hitting the market November 19th and had an offer within four days. That first offer was crap, plain and simple. It was an investor, fishing in a seller’s market, for a deal. Though the home was priced for the updates needed, compared to comparable sales, the investor took off the amount needed for those updates from the list price when making the offer. Obviously, the seller waited for another offer.
Offer two was better, but still leaning on what needed to be improved and whining about how much work the property needed. The kitchen and bathrooms were cosmetically outdated, but were functional. While offer two was pinching pennies and begrudgingly upping their offer up, offer three came in on November 24th with a full price offer. The seller went with offer three. Buyer two was willing to do more, but only when a higher offer appeared. Not how you win in multiple offer situations. When a serious buyer appears, you make the deal.
Today, December 23rd (2020,) this Newgate townhouse closed for full list price of $260,000.
If you are looking to buy or sell in Centreville, Manassas, Gainesville or Bristow please get in touch with me. My years of experience will help you squeeze every dime out of your home sale.
On Thursday November 19th (2020) I was pleased to introduce 14455 Gringsby Court in Centreville’s community of Newgate to the market. Priced at $260,000, I didn’t expect it to last through the weekend. Over the course of the next six days there were over two dozen showings. And while I have listed over twenty homes this year and know the rhythm of the market very well, the sales process on this one stumped me.
Hitting the market on a Thursday, and being the lowest priced townhouse in the neighborhood, I consulted with my seller about setting an offer deadline. In the seller’s market we have been experiencing, it is RARE to find a listing that doesn’t have an offer deadline. However, in the case of this townhouse, the deadline for offers came and went and none of the agents representing interested buyers seemed to have any concern about getting their offers in. So the deadline was lifted. Enter the lowballers.
This townhouse, priced $40,000 lower than the upgraded unit of the same model that just sold, was slapped with an unbelievably low offer. A cash buyer of course. They think, somehow, cash gives them the right to ask for a discount. Why would a buyer accept a low offer when they have had two dozen showings and have a handful of interested buyers? Cash buyers still haven’t figured out their value in this seller’s market.
Next up, a buyer that, like the cash buyer, wanted to punish the seller for not updating the kitchen and bathroom. Well, that’s the reason it was priced lower. We went round and round and were negotiating a higher price when….BAM….a truly serious buyer saw it and made an offer within hours. It was an offer that expressed the seriousness of the buyer and showed her understanding as to how this unit was priced from the get go.
Last night, the second buyer was scrambling to go higher. The danger to coming in low and not understanding that the price of the improvements is already worked into the list price on a home like this is that you make a crappy first impression. Coming into any offer situation in a seller’s market, you have to make your highest and best offer. There’s no bullying your way into a buyer’s market.
This sale is scheduled to close just before the Christmas holiday. Stay tuned for the final sold price. In the meantime, if you have a Newgate townhouse to sell, give me a call and let’s get it done. This is a great time of year to sell. Clearly, there are over two dozen buyers in your neighborhood looking for property.
Whenever I take a new listing, the preparation for pictures is critical. First of all, I believe in professional photography for my listings. I tried to keep up with the advancements in technology as long as I could, continuing to take my own listing photos up until 2017, but that is when I left it to the pros. Sure I could go and buy a top of the line camera, but that doesn’t make me a professional photographer. The pros have the expertise to set up the shot correctly and, most importantly, edit it after the fact to look flawless.
You can’t rely on photo editing, however, to clean up your home and make it look great. There needs to be to actual work put in to make sure the home is looking great on photo day and, just as importantly, in keeping with how it looks online when buyers come to see it in person.
Before the photo shoot, I am there either to do light staging in a vacant home, or help you edit your furnishings and decor, to put your home in the best possible light. And on photo day, I arrive early to make sure all the lights are on, ceiling fans are off, trash cans moved out of view, and if needed, move things around to assist the photographer in getting the perfect shot. An example of that is the opening photo. The cord for the light on the night table was just laying against the wall and looking out of place. Thinking quickly, I took a table from another room and put a plant on it to make the cord less obvious.
In the photo of this family room, taken from the breakfast nook, a recliner was moved out of the way to show the openness of the floor plan, and not the sellers well worn furniture.
Getting top dollar for your home is a function of marketing. You can sell in any market, but how your home is marketed by the listing agent is going to determine just how quickly it sells and how much money you can get for it. In our current seller’s market, anyone can sell a home. A professional marketing agent can squeeze every dime you deserve out of it. Choose carefully when choosing the listing agent to market your home. Ask to see past virtual tours and photographs. Go to their website. You don’t get a second chance to make a first impression.