Earlier this year, I listed a property for a client who needed it listed not to sell, but to satisfy a strange HOA requirement. So, we listed it about 10% over the current value based on the comparables in the area. Strangely enough, we got it under contract at ALMOST full asking price. Both myself and the client just knew it wouldn’t appraise at the contract price. But, it DID. Unfortunately, that buyer couldn’t perform and we had to put it back on the market.
In talking to the other agent in this transaction, who has a mortgage background, we discussed the appraisal. She said she KNEW it would appraise because just a few weeks earlier, the big banks had made some new demands on appraisers. Mainly, that if the buyer was solid, the appraisers could go outside the neighborhood, use older comps, whatever to find the value of the property. Now if it was just ridiculously high, it wouldn’t appraise. This one was just 10%.
She said that the big banks weren’t making enough loans and wanted to get more money out there, so this was one way they have made it possible for more loans to happen. Because of this, I’ve adjusted my strategy for listing properties just a little. It’s also caused me to have to rethink how I work with my buyers as well.
THIS is why I spend a lot of time networking and talking to a lot of diverse people to keep tabs of what’s going on in our own industry and those that affect it. It’s the only way to help my clients get the very best service.