Tuesday, August 30, 2011

Once Upon a Time

Once Upon a Time, a Seller was able to price their property and chances were that the lender would match the sale price on the appraisal. This was occurring because appreciation was happening faster than transactions were being closed on. Not anymore! Today, appraisers are under great scrutiny and closely regulated. In today’s market, Sellers need to be realistic about market value and list their property accordingly.
 
If a Seller wants to close on the sale of their property, they must understand that loans are made based on appraised value. If a property doesn’t appraise for the sale price, it’s likely that the Seller will have to consider selling for appraised value. If the Seller disagrees, the Buyer may cancel the purchase contract and move on. Sellers need to know that the industry, in an attempt to maintain uniformity for all appraisals, has set rigid standards and mandates that specific information about the subject property and its comparables be collected and used when appraising. 
Sellers have an emotional attachment to their property. They sometimes see value that is not really there or have unrealistic expectations of what their net proceeds should be. Too often, I am told by the Seller; ‘I can’t sell for that; I owe more on my mortgage and I have to cover the commission.’ The outcome of this usually ends up costing the Seller. The market value rules no matter how leveraged a property is.
The listing agent knows best and uses the latest technology and data to come up with the approximate opinion of value. The agent may adjust the price up or down depending on the Sellers expectations. If the Seller is motivated, one would adjust down and up if the Seller has time to test the market.
A realistically priced property should sell in 30 to 90 days. When selling a property, time is of the essence. The sooner a property is sold the less it cost the Seller. Once a Seller has made the decision to sell, they must consider the monthly cost of keeping the property and calculate the consequence of a lengthy selling period. Maintenance, taxes and depreciation are some of the forces working against the Seller’s bottom line.
The first two weeks are vital to this process. During this time the Seller’s agent will be gathering the information needed to determine if the sale price needs to be adjusted up or down. The number of showings and feedback received from the prospect Buyers will give the Seller’s Agent the data he or she needs to suggest the appropriate adjustment to the sale price. It is very important that the Seller and the Seller’s Agent work closely together on this. Sometime between the fourth and sixth, the Seller’s Agent should reanalyze the subject property area and re-evaluate any further adjustment to the marketing or sale price of the property. Some of the factors which the agent will look for in the new analysis are new listings and closed sales in the area, which may have changed the playing field since the property was originally listed.
In the real estate business, many agents say ‘the first offer is always the best offer.’ When an offer is received, the Seller should carefully consider it and try to work closely with the buyer in order to work out any disagreement there may be from either party. This may very well be the best opportunity and may be the last for a while.

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