I had a conversation with an appraiser today about the value of a pricing adjustment I needed to make while helping a client set a listing price. We real estate agents work with real estate appraisers to get general ideas of how they value things like brick versus vinyl siding, additional square feet of space, pools, outbuildings, and various other things that we come across in working with clients. We use this information to make adjustments when recommending listing and offer prices. It’s important for us to be on the same page with appraisers since once we have a contract on a property that requires a mortgage, the lender will hire one of these appraisers to help the lender decide if they agree on the price. It’s only logical since in most cases, the lender will actually own the largest share of the property for quite a while. If the appraiser and lender think the buyer has agreed to pay too much for the property, then the lender will not agree to the loan. That makes everybody sad! So, there’s no point in pricing a property too high in the first place since foolish cash buyers would be the only ones who can buy it at a too-high price.
Unfortunately, we don’t see many foolish cash buyers running around loose these days.
My appraiser friend volunteered a comment about something agents have been seeing. That is that the lenders are telling the appraisers to be very conservative in their valuations. This can have a significant effect on the number of contracts that don’t go to close because the buyer can’t get the loan at the agreed price. So, sellers should keep this in mind when pricing property and negotiating offers. Like I said, a contract that doesn’t go to close because the loan didn’t happen makes everyone sad!
