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Rob Purifoy's Blog

By Rob Purifoy | Agent in Plano, TX

Are we scared to set a record price-appraisal fears?

Prices on both sales and rentals have hit their bottom at least 6 months ago, from where I sit anyway, ( for rentals more like 3 years ago) and demand is now outstripping supply for well kept homes. This month alone I have been on both sides, listing and sale, where the homes went under contract for full list price-or over and some with multiple offers. In the case of my listing it will set a precedent in the neighborhood for price per foot because it is very well kept with upgrades etc. In the case of the two purchases, they were set too low on the list price and the appraisal came in higher than our purchase price. This makes me wonder, are we so scared of appraisers that we are keeping the market flat by not trying to bump it a bit with our list prices?
 
It seems to me that, in these recent cases I've had, that if there are multiple offers within 3-5 days on the market that the public is willing to pay the price-or more for a well kept home. I think we as Realtors have been so scared in the past years that we are gun shy to try to set that listing for $5,000 or $7,000 higher. How else are our property values ever to rise if we keep looking backwards at the past 6 months? I understand it has to be within reason but keep in mind, I'm talking about the well kept homes, which is what it takes in this market.
 
In another case, I lost a house for my buyer, that should have been listed higher, and it went for above list price with multiple offers. Now this may be a good ploy if it was done purposely that way but it certainly does no good to potentially leave money on the table just to show the seller how quick you can sell the house. And it certainly does no good to help comps to help our equity rise.   

This is not to speak of isolated areas either, these three cases spanned from Sachse to far N. Dallas (190/Tollway), to Frisco, so far.
 
Sellers, also take note of this. If you choose to go with a carpet allowance or a painting allowance don't expect full price. Buyers want Martha Stewart homes, not Bob Villa fix-me homes. 

So point being, if the home is really nice and shows well, don't be afraid to set it a little above the past six months worth of sales that were also likely set too low in the first place. As always, the buying public sets the market, or at least partially dictates it. Yes occasionally an appraiser could step in and kill a deal but personally I have seen a loosening up and a willingness to move prices slightly upward. In a market where we are getting multiple offers in as low as a few days on the market, that should tell us the trend.   
 

Comments

By Christopher Lewis,  Tue Jul 31 2012, 06:34
Rob,
Very true. We have and ongoing argument at our local board on this matter. Appraisers consistently coming in low. And agents continuing to lower their market value for fear of it not appraising. At some point this has to stop. Although the market is littered with distressed properties it is not fair to those that are not. Why are we allowing these to determine true market value? If someone is willing to pay for a NICE home, then let them. We are never going to move forward with this trend continuing.
Thank you for the great point!
Chris Lewis

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