So Your Home Didn’t Appraise, Now What?
The combination of a falling market and the new appraiser laws have created some interesting problems. I will comment on a couple of them. Hopefully it gives you some insights to be prepared for.
a. Know that many are complaining their appraisal was wrong, too low. Appraisers are now randomly chosen. Each bank has it’s own approved list. I comment on it on my national blog: Real Estate Undressed.
b. Be sure of your value if you are a seller. Value is based more on comparable sold homes, not prices of homes on the market. A surprisingly common buyer strategy you should be prepared for is what I coin as the ”Option Offer“. An Option is the right to purchase – say for example your home. Over my real estate career I have negotiated over a hundred options for buyers. Options are often a terrific solution. They also have an interesting effect on coming to the proper value.
Here is an example of what I mean by this. Near Marymoor Park in Redmond is a large apartment complex. The seller wanted too much money for the land. I was contracted to secure the land for the builder developer. The option worked perfectly. The seller believed his value was based on a certain number of build-able units on his land. We knew the zoning would limit the units to a smaller number.
When a seller gives an option, mentally the seller has sold the property. We knew that. After submitting our plan to King County we were approved for the number of units we expected. We returned to the seller that our price would have to be lowered accordingly or we would walk from the transaction. We got our price. He got a fair market price.
That can happen to you the home seller. When the home you have mentally sold doesn’t appraise for the price you got, you must either reduce the price or chance a new transaction working out. No buyers pay a higher price than the appraised value. (I have seen one acception to that many many years ago on a terrible VA Appraisal).
Take note, some buyers are intentionally making you an “Option Offer”. Yep that surprises me too, just be aware it is happening. Take the time to know what your home is really worth, versus what you are dreaming, feeling, or needing it to be worth. You must be prepared to know how to react if your home doesn’t appraise for what you sold it for.
So it didn’t appraise, now what? A. You draw a hard line and take your chances. B. You change your price.
This photo is one Kathleen took from our current Park Drive Condo listing. If you are looking for a home in Issaquah Highlands call us at 206.618.3724. There are some good buys out there and some not so good. We can help you find that treasure.
