High Sales Price & The Ensuing Appraisal Problem
Rob: Hello. I’m Rob Jenson with The Jenson Group here in sunny Las Vegas, Nevada, at RE/MAX CENTRAL, and I’m here today with Jeff Lewis. Good to see you, Jeff.
Jeff: Good to see you, Rob.
Rob: Thanks for coming by. We just sold your house in Willow Creek, that’s a guard-gated Summerlin community here in the west side of town, and we sold for $955,000, which was actually $40,000 less than we had in the contract for. We had it in contract for $995,000. So go ahead and jump right in; tell us a little bit about what happened and your experience with the process.
Jeff: Well, the appraisal came in at $995,000, the original appraisal, and then my buyer’s bank did an appraisal review and they reviewed the house at $100,000 less, essentially to $900,000, if memory serves me. So we had to renegotiate the loan – or the purchase price of the house after the contract, and we finally settled at $955,000.
Rob: Yeah, they knocked it down to $900,000. After fighting with them, they came up to $935,000, the buyer came up to $955,000. So it was “over appraisal” but it was not really over appraisal, still under the first appraisal under sales price. So as far as advice for sellers looking to put their home on the market today, do you have any advice at all how to deal with that situation?
Jeff: Yeah, I think if we had to do it all over again that I think getting an appraisal at the beginning of the process would be important, especially with the values moving around they seem to be doing in this market. And just being aware of where your comps are and –
Rob: And fortunately, as you know, there’s a lot of – most of the sales are short sales and bank-owned, and appraisers use those and unfortunately buyers down the road, they don’t know anything about the condition of those, and maybe those were missing appliances or didn’t have landscaping, but they don’t know that. All they see is the sales price.
So I think what we talked about earlier was before you put the home on the market, get an appraisal – now in your case, yes, your first appraisal was $995,000, but there were holes in his appraisal that you didn’t take quite the necessary adjustments.
I think just getting any appraisal paid for, don’t just get an opinion; we originally talked to those guys which was good, but I think actually paying someone a few hundred bucks to actually spend the time to do it right and really see what that number could so you can really plan accordingly. Because there’s no need – if that number is not something you can live with, then maybe don’t sell, rent the house out, or do something else. But there’s no need to move out and make future plans with your life with a number that’s unrealistic.
Jeff: Yeah, unfortunately, it’s different these days than it has been for many years here in Las Vegas, in that it used to be for a long time is you agreed on a contract price and your appraisal came in and it was at the contract price, so that’s not the case anymore.
Rob: Bummer. Yeah, at least we got it done. Any other advice as far as, you know, if someone was looking to hire a realtor in today’s market, any advice as far as marketing issues to expect, or anything?
Jeff: Yeah, and you and I talked about this and I think it’s real important that the realtor be educated and experienced in the particular price range of the house, the area of the house, which I felt you were. And I think marketing is very important. Rob did a good job and does a good job in my opinion of doing a lot of marketing, mailers, brochures, open houses, and I doubt you want to talk about open houses. He does a lot of open houses, which is all good for generating interest and traffic; that’s what sells the house.
Rob: For people that don’t know, Jeff got the boot many times on the weekends when we showed up with the signs.
Jeff: But you know, it’s fine. It gave me an excuse to keep the house clean and picked up and stuff.
Rob: And go to the lake.
Jeff: Go to the lake, exactly.
Rob: Cool. Thanks again for hiring us to do the job, and hopefully more business in the future.
Jeff: You bet. Thank you, Rob.