I've been laughing for a few days about this, so I thought I would blog about it... Granted, the Dallas market does not follow the norm of the "Nationwide" market that the news is always talking about. We never had a bubble and prices have been fairly steady for the past few years, and almost flat the last couple of years.
With that said, one of my husband's co-workers bought a house last year for $184k. Just over a year later, he decides he wants to buy a house with his new Realtor girlfriend so they list his house for sale. His girlfriend is a fairly new idiot, I mean Realtor, and according to the MLS has only closed 8 transactions in 3 years. So, even though she wants to say she's been in the business for 3 years, to only have 8 transactions, she's very much still GREEN and has a lot to learn. Most of her sales have been in the $75-100k price range.
Anyway, she lists "Bob's" houses for $249k!! I did say he just bought it for $184k, right?? The area he lives in is seeing about a 3% appreciation and he put about $5-7k of updates into the house. He thinks his house is made of Gold and apparantly she agreed, and listed it for the outrageous price.
The weeks go by and he continuously tells my husband about all the showings he's having. Oh yeah? Where are your offers? Last week an offer came in. An offer that he thought was a low-ball and it took them 4-5 days to actually negotiate to a contract. I just kept telling me husband that he can argue all he wants about what he "wants" for the house, but it won't appraise. Apparently, the buyer got fed up with countering back and forth, and I guess the buyer's agent knew it wouldn't appraise either, so they finally just agreed on Bob's price because they knew the price would reduce down anyway...
Bob gets all excited that he has a contract and tells my husband that I don't know what I'm talking about and got a contract for $243,000!!! Yeah, $243k!! That's only 2.76% off list price which is average for the area... Fast forward and the appraisal was on Thursday. House doesn't appraise!! Bob spends the next few days saying he's going to get a second opinion because there is no way he is going to lower his price... but wouldn't you know it, the second opinion that he wants, he is going to have to pay for!! Yes, he's too cheap to spend $350 on a second opinion.
Yesterday, my husband comes home and says Bob decided to go ahead and sell the house to this buyer for the appraised amount. I asked what it appraised for, but Bob wouldn't tell my husband. It must have been VERY LOW for him to be that embarrassed to not say... but what's even more sad is if he spent the $350, he might have been able to get a second opinion slightly higher to save a couple of thousand dollars. I guess the numbers didn't make sense to him or his idiot, I mean agent.
I'm counting the days to see it closed in the MLS so I can see the sales price!! My guess is there is no way it appraised higher than $220k. No freakin' way!! LOL!!!
The lesson here is, it doesn't matter what you WANT for your house. It matters what it will APPRAISE for and what the buyer can BUY it for. Price your house correctly, and you won't have embarrassing problems like Bob!
I am gonna bookmark this one.... Now that you have my interest.
Well said! I just did not like the part when you called her an idiot!
Donna,
That's a good one. Everything sells for a price which is set by the buyer. That's why appraisers use comps to arrive at their numbers because that's what the market tells them. Unfortunately there are listings that go way over the true value and even if they do attract offers, the appraisal usually stops these deals cold.
Thank you, everyone, for your supportive comments.
Hassan, I almost felt bad calling her an idiot as I knew it would sound bad... however, the way she's trying to represent her boyfriend, calling her a Realtor or an agent doesn't sound right either because she gives me (us) a bad name.
What really counts? Is a couple of things...buyer establishing price and it has to appraise. I have had only one transaction that didn't appraise and it was 100,000 below contract price seller was angry and didnt want to have another appraisal done.
I recently had a buyer who wanted a house in a declining neighborhood. I told him I couldn't find comparatives for what the seller was asking but he really wanted the house. There really wasn't a house that large that had sold in the last year so I thought maybe they would go out of the neighborhood. Problem was this newer neighborhood was surrounded by older neighborhoods so to go out you really had to go quite a way out. As I had thought the house didn't appraise. What I found out is they wouldn't go out of the neighborhood; they just made ajustments on what had sold. Long story short my buyer backed out and I found him a great home that had no problem appraising. (He should have listened to me in the first place).
Thank you Ron and Marchel. I also have had one situation where the house didn't appraise, but the buyer just HAD to have the house, and they were buying it sight unseen! They were only going off my pictures and video of the house. I kept saying it was way over priced, and 4 appraisers agreed with me. The sellers got an appraiser to get it higher, up to $280k instead of $250-260k, and even though the sellers were upset that they didn't get their $300k price, the buyers were ok with over paying for the house. I told them they had to live there several years in order to resell it, but when they came into town for closing, they said this was "the house", so I feel better.
Hmmmm. Do you think you could start a fun A/R "How Much Did It Really Sell For?" pool? That might be a fun new application that A/R could add to its services.
: )
Well just because you have a Real Estate License doesn't take away anyone's "Idiot Factor". Point is there are a LOT of them out there.
Can't wait for the actual price.
Deirdre, that's a great idea! Problem is, everyone's market it so different, answers and guesses would be all over the board.
Sybil, you're so true... but taking the Agency course and passing it should give someone a better idea of the smarter way to represent a client.
Jim, I appreciate your opinion. I have no resentments towards her just because she really has no business, just a sale every now and then, so there is no competition involved.
Enjoyed the story. It'll be interesting to see what the final price actually is.
Our market just doens't warrant that! I had to take a seller today to preview other homes in her neighborhood to convince her that yes, after 10 days on the market and 2 offers - both fell through because of other less expensive homes popping it up she needed to reconsider her asking price. $5000 more than I suggested to begin with... She sees is as we had 2 offers in 10 days - more will come. At least she's thinking positive. It seems to be a trend with me lately and the sellers I have been talking to! UGH!
2 offers in 10 days??!! WOW!! She needs to take one!
I wrote an offer on a house on Sunday that had been on the market for only 5 days. It sold a year ago for $137k. It's now listed at $149k as she's getting married. We submitted an very clean CASH offer for $142k. They counters FULL price! We didn't respond. They called and said the seller would like to revise her counter... they came down $500! I laughed! So, my buyers went up $1000 in good faith to $143k. The seller rejected the offer and wants to sit and wait for other offers. In our market, she might be sitting another month waiting, and in the meantme, she'll be off getting married and on her honeymoon that she won't have time to respond to an offer... she could have closed on the house before community property laws took over, and she messed that one up... it's not going to appraise at $149k with it selling just a year earlier at $137k.
a professional realtor with good comps for their cma shouldn't be far off on the appraisal. you'd be looking at the same info.
next time be nice to your fellow realtor whether she earned it or not.
I think your story was a good example of what not using an experience agent can lead you to.
I don't agree with the way you say it...you could have made the same point leaving all those bad comments out...
The sales price was posted today. Keep in mind that Texas is a non-disclosure state, so not all the facts have to be disclosed. The amount for closing costs was not listed, so you know the seller netted less, but somehow, the house actually appraised for $232,000. Yes, I was off from my questimation of $220k, but sometimes appraisers do what they have to do in order to help keep a deal together.
Either way, if the seller had spent the extra couple of hundred dollars to get his own second opinion, he might have netted more, instead of going from $249k down to arguing over $243k to eventually sell for only $232k.
I tell my clients this exact potential problem that can come up if they want to list above the market. I'm shocked that your husbands friend even got an offer.
David N. Slavin, ABR www.sellmyhousedave.com
David, I was also shocked he got an offer, but they say there's a house for everyone.
Robin, My parents relocated out of Scottsdale at the beginning of all your activity there, and they got over $75k more than they ever thought they could get for the house. 4 offers by day 2, and another couple offers by day 4. One of the buyers begged to buy it and asked what it would take and they point-blank said they had offers at full price, so that buyer went over price. I was amazed, so I defintely know what you're talking about on the higher prices there. We never had that in Dallas.