Comments For Appraisal Under Contract Price

[Tom4value]

Agents are not required to list at market value, are they? Sometimes it is a marketing ploy

No they are not. In fact, they have an obligation to get the highest price for their client. However, their obligation is to do what is best for their client, which means a deal that actually closes. The realtors I talk to that are GOOD realtors say that if an offer comes in higher than what the market will bear, they will advise their client to either reject the offer outright or warn them that if the appraisal comes in low they will have to lower the purchase price to make the deal work.

There are pros and cons of both options. For the first one, the con of course, is the realtor may be wrong and that it actually would appraise for the contract price and they reject a valid sale. For option two, here in MA, some buyers will submit a ridiculously high offer to get the agreement, not expecting to actually pay that amount. Here in MA, I don't show up until a week or two after the agreement is signed. If I come in below contract price, they buyer will come back with a lower offer, knowing that the other potential buyers are long gone. Marketing ploy if it works, playing a stupid game if it doesn't.

 

[ZZGAMAZZ]

I like this part, The subject's pending price ($355,000) is not within the comparable sales' indicated value range ($300,000 to $350,000).

I personally do not like to say the price is considered High. Because that makes it sound subjective, as if we think it's too high, and that is why it is not the MV ( despite citing the definition).

If there are concessions or other known factors, I state that the price appears to be affected upward by the concession. If no clear reason like concessions is present, and no known unusual circumstances are known, I make a bland statement that an SC price can be the result of individual

No they are not. In fact, they have an obligation to get the highest price for their client. However, their obligation is to do what is best for their client, which means a deal that actually closes. The realtors I talk to that are GOOD realtors say that if an offer comes in higher than what the market will bear, they will advise their client to either reject the offer outright or warn them that if the appraisal comes in low they will have to lower the purchase price to make the deal work.

There are pros and cons of both options. For the first one, the con of course, is the realtor may be wrong and that it actually would appraise for the contract price and they reject a valid sale. For option two, here in MA, some buyers will submit a ridiculously high offer to get the agreement, not expecting to actually pay that amount. Here in MA, I don't show up until a week or two after the agreement is signed. If I come in below contract price, they buyer will come back with a lower offer, knowing that the other potential buyers are long gone. Marketing ploy if it works, playing a stupid game if it doesn't.

Or listing agent can be proactive by obtaining seller's permission to advise potential buyers that all offers--whether high or low because the appraiser's experience, bias, competence is wily-nily and unknown in advance--so All offers will be countered with the seller's requirement for an appraisal contingency that requires the buyer to come up with cash if the OV is less than cotract... in a strong market.

 

[J Grant]

Or listing agent can be proactive by obtaining seller's permission to advise potential buyers that all offers--whether high or low because the appraiser's experience, bias, competence is wily-nily and unknown in advance--so All offers will be countered with the seller's requirement for an appraisal contingency that requires the buyer to come up with cash if the OV is less than cotract... in a strong market.

When the market was hot, a number of sale contracts had the clause that if the appraisal was under the SC price, the buyer would put up cash to make up the difference.

Fine with me if they want to overpay. Many of these deals were appraised lower than the SC price - the lender was not overleveraged on the loan, even if the buyer overpaid.

 

[Webbed Feet]

I really enjoy dropping in now and then just to read how things have NOT improved within the field of real estate appraising. While a number of posts show some doing a very good job standing their ground regarding ethics and good appraisal thinking ... so many others express thoughts that should go straight to the real estate appraising thought police and they should be sent to thought transformation concentration camps. Not so great, mostly because I know the very worst, and majority, of the bad bunch never post here at all and that the majority posting here all mean well and try to be very good.

 

[Tom4value]

Or listing agent can be proactive by obtaining seller's permission to advise potential buyers that all offers--whether high or low because the appraiser's experience, bias, competence is wily-nily and unknown in advance--so All offers will be countered with the seller's requirement for an appraisal contingency that requires the buyer to come up with cash if the OV is less than cotract... in a strong market.

That is actually quite common now in my market. More than one broker told me that it is a way to weed out the serious buyer from the ones who want to play games.

 

[Functional Obs]

APPRAISED A 2 BEDROOM 944 SF RANCH WHICH IS UNDER CONTRACT FOR $355,000 AFTER 5 DOM. LISTING PRICE IS $320,000.
MY VALUE USING 6 COMPS AND STRETCHING AS FAR AS I COULD, CAME IN AT $345,000. NO WAY I COULD SEE $355,000. MLS STATS INDICATED A YTD INCREASE OF 5% WHICH I APPLIED IN ADDITION TO MARKET DERIVED ADJUSTMENTS.
I'M LOOKING FOR COMMENTS TO SATISFY LENDER AND BUYER THAT MY VALUE IS GOOD AND THE SALE PRICE IS TOO HIGH AND NOT JUSTIFIED.
THANKS,
JEFF

Well, whatever you write, just be sure to put them in ALL CAPS so nobody will read them!

 

[Tom D]

I READ THEM.

 

[Tom D]

Well, whatever you write, just be sure to put them in ALL CAPS so nobody will read them!

I READ THEM.

 

[Terrel L. Shields]

STRETCHING AS FAR AS I COULD, CAME IN AT $345,000

I would never admit I 'stretched' anything.

 

[Fernando]

Hey Jeff.

First off, please turn off caps lock. It makes the data hard to read, and feels like you’re shouting the entire time.

Secondly, in a more professional way, tell the lender and buyer what you just posted here, and show/prove why you cannot make the sale price. Your job is to not hit a number, but to figure out what the market could bear at a point in time. If your data shows there is no way, even after looking for like comps to prove, you just need to show how you got there.

It is ok if they don’t like your answer, and they don’t have to like your answer. You are obligated to hold up the public trust with with your work, and you do nobody any service by trying to squeak it by if it can’t.

Didn't know CAPS is such a turnoff. Didn't mean to get reviewers upset.
I'd been using CAPS for decades because it's easier. No need to use my pinky in pressing the SHIFT button.
When I clone my reports, I noticed the CAPS and I now make extra effort to retype to normal sentence case. The things I do to make a report look good visually.