Agent2Agent in 08009>Question Details

Stephen Clyde, Real Estate Pro in 08009

Are my fellow listing agents using seller sponsored appraisal as a marketing tool?

Asked by Stephen Clyde, 08009 Fri Nov 25, 2011

As listing agents are you advising your sellers to get an appraisal on their homes? after getting the appraisal where are you pricing the home in relationship to the appraisal?

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10
I like Jeanne's answer below. I have had sellers do this to assure buyers the house is priced correctly. I have an appraiser who will also update it every 3 months as needed for a very small fee so it is always fresh.
1 vote Thank Flag Link Sat Nov 26, 2011
I agree with Ron.

There is a technique that some investors have used to minimize the risk of a low appraisal. But it only works if you know which lender will be making the loan on the property. Let's say it's ABC Lending. You contact ABC Lending and ask for a list of their approved appraisers. Then you select one from their list of approved appraisers to do the appraisal. After it's received, the purchase proceeds. And when it comes time for the appraisal, you already have one in hand--done within the 90 days by one of their approved appraisers.

However, I don't know whether that technique still works. And it won't work if the buyers decide to go with DEF Mortgage instead, or if the house doesn't get a contract quickly.

Finally, recognize that what we're all trying to avoid are those crazy, low, uninformed, inaccurate below-market appraisals. If you do a decent CMA, you can be reasonably confident that a good appraisal will come in at about the same number most of the time. The risk is that the appraiser will be from out of town, or rushed, or inexperienced. Getting a seller-paid appraisal doesn't alter those situations. . . . unless you're able to share the appraisal (or at least the comps) with the lender's appraiser.

Hope that helps.
1 vote Thank Flag Link Fri Nov 25, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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I have seen this a few times in the last couple of months. It was not common in our market prior to this year.
0 votes Thank Flag Link Sat Nov 26, 2011
If it is a unique/custom home, absolutely. In these cases it can help the Buyer to understand the home is priced right.
0 votes Thank Flag Link Sat Nov 26, 2011
In this buyer-centric market, buyers tend to be suspicious of any info that is not self generated. It may be useful to support the list price. A recent example to share....

Homeowner recently refinanced, not planning to see anytime soon. Then plans changed, so the appraisal was very fresh when we met to discuss listing their home for sale. I reviewed my pricing recommendation without knowing the appraisal number. When both analysis came to the same number, it was an easy sell to the homeowner.

The home was listed at a very smart price - well received by the market and sold quickly for top dollar.

Best,
Jeanne Feenick in New Jersey
0 votes Thank Flag Link Sat Nov 26, 2011
Not in all cases and only for developing strategy.
High value communities with diversified housing in regards to age and size, which have very low number of sales are the prime candidates.

A recent sale allowed the seller to benefit from a commitment for the buyer to waive any appraisal contingency and would come to the closing table with a big pile of cash. For the home owner, it provides a layer of transparency allowing the appropriate strategy to be discussed.

Best of success,
Annette Lawrence
ReMax Realtec Group
Palm Harbor, FL
Web Reference: http://www.MyDunedin.com
0 votes Thank Flag Link Sat Nov 26, 2011
Another concern with ordering an appraisal is that, at least in California, it becomes a mandatory disclosure if it points out a flaw in the home. Appraisals containing only a price opinion do not, but when the appraiser writes down anything about a feature of the home that is broken, worn or otherwise needing attention, the document automatically must be disclosed to the buyer. We assume a seller will take care of any problems noted, but if the appraisal contains a value judgement that is lower than listing price or what a bank appraiser might establish for a value, the seller is stuck showing it to buyers anyway - it can't be just thrown away. Better to go with a CMA.
0 votes Thank Flag Link Sat Nov 26, 2011
Not as a marketing tool...I would only suggest it if the seller is having trouble coming to grips with my advice on pricing.
0 votes Thank Flag Link Sat Nov 26, 2011
Not sure why you would advise a seller to pay for an appraisal because as Don said you have no guarantee that it would be accepted by a bank. (Sellers already feel they are paying too much out of pocket without adding another expense). As an agent we actually know the market and neighborhood far better than an appraisor (remember an appraisor is appraising for loan value not the real estate market). I don't actually price the home I let the seller do that after I show them the range (I never give one figure) of where my CMA says it should be and depending on what is going on in the neighborhood. It is a collaberative effort.
0 votes Thank Flag Link Fri Nov 25, 2011
Seems like a waste of $450 for the Appraisal;
Only good for 90 days and the new Lender will not accept it.

Better off letting the Buyers Agent do a new CMA for his clients.
0 votes Thank Flag Link Fri Nov 25, 2011
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