Appraisals are a very hot topic these days.
The market is moving very quickly. And there seem to be more and more buyers with significant amounts of cash.
In my opinion, appraisals come in 3 varieties:
-A Private Party appraisal (for divorce, tax or estate purposes)
-A Private Party appraisal (for sellers with agents who need guidance)
-A Bank appraisal (to determine a willingness to lend)
But 99% of the time, when we hear about appraisals, and appraisal contingencies, they almost always pertain to a bank appraisal.
For American Real Estate market is powered by mortgages. For millions of people, they are the only path to homeownership.
The catch is: Mortgage Lenders will not lend on an agreed purchase price that is not supported by a written property appraisal.
And in markets like this, appraisal shortfalls are incredibly common. With low inventory and significant buyer competition, many buyers are leveraging the situation to gain an edge over their competition.
That means these buyers are winning-over sellers by agreeing to pay the difference in cash, in the event of a low appraisal, that doesn’t support the contract price. And buyers who don’t have the cash to remove this risk are being passed-up.
We joke that a Real Estate agent (when the buyer is financed) must sell a property twice…Once to the buyer, and once to their lender’s appraiser.
This just doesn’t apply much anymore.
And as the market moves forward, more data builds up, and appraisal issues will become less of an issue.
Once cash-heavy buyers lose their ability to leverage their lack of an appraisal contingency, financed buyers will once again move towards the top of the ladder…because usually their offers are the highest.
This is something we hear all the time. It’s a testament to decades of deterioration of the value of a Real Estate Agent.
In all actuality, a Real Estate Agent is a fiduciary, a lot like an Attorney. But the barrier to entry into the industry is so low, and there is so little education required.
There is SO much sensitive information transmitted, and so much trust required. But the role of an Agent is often minimized to “turning keys” and “writing simple contracts”. This is why the word “USE” has become so prevalent.
Humor me here…
I am tired of seeing homeowners leave money on the table!
In the past few years, there has been a massive push towards the advent of iBuyers…with “hassle-free” offers.
What are iBuyers? They are usually institutional investors, who are willing to purchase a property with very few contingencies, ALL CASH. They are in the business of fix-and-flips.
I believe it’s deceptive, because the ads are sometime accompanied by these words:
“Highest price”, “Best price”, “Hassle free”
But these companies are working to earn a massive profit margin. They are looking to take advantage of the homeowner who is distressed in some way (behind on payments, behind on taxes, property in disrepair).
In almost every case, I believe that my team could achieve a higher price by listing the property on the open market. And our fees are less too.
In my opinion, the only issues with tours/repairs are when the transaction is mismanaged by the listing broker. These are the hassles that homeowners are trying to avoid. Especially when your property shows yucky. A seller will never have an easy time bringing buyers through to tour the home.
My team specializes in the 1-weekend tour model.
That means if your home is priced right and marketed properly, you only need one weekend of tours to secure a contract.
Don’t be deceived!
1) Yard improvements | These are usually the easiest and most cost-effective improvements that will bring you value. In our current resale market, your outdoor space is just as important as your indoor space. Depending on how much space you’re working with, a simple outdoor dining area can add immense value. You can also add a stretch or turf, or a nice fire-pit for a low cost. Reach out for specific advice.
2) Painting Cabinets | Between kitchens, bathrooms and linens, this is one of the easiest way to add long-term value to your home. But the quality of the job is UBER important. If possible, have your cabinets professionally painted with a quality lacquer that won’t peel or chip. Reach out for a referral to an amazing and inexpensive paint crew.
3) Countertops | Not to be underestimated! This is one of the most impactful changes you can make to your home. The psychological effects on a buyer are HUGE. And the options are extensive nowadays. Between Quartz and Granite, there are lots of affordable options to choose from, and exciting features like waterfalls and breakfast bars are extremely marketable to buyers. Reach out for links or ideas on how to make your countertops a showstopper.
4) Feature Walls | Whether it’s wood shiplap, tile or wallpaper… these features are setting records in our current resale market. Choose a wall that is central to your living space or even your master bedroom. Texture is important, and color is great! Depending on your paint scheme, the direction you go can be simple or super colorful. Pinterest is a great place to check out examples. Reach out for specific links to our favorites.
5) Built-in Cabinetry | This is an absolute game-changer. Most buyers think built-in cabinetry is more expensive than it actually is. It’s a great way to fill an empty space… or create much needed storage for board games, linens or decor items. To take it to the next level, add lighting that will dramatically affect the feel of your living space. Reach out for photos, or a list of our preferred built-in cabinet contractors.
6) Pools | For 2020 this is a favorite in Southern California. If your yard has enough space, it is something you should consider. We used to advise homeowners that they might not get their money back when selling, but all that has changed. Now, pool homes are fetching serious premiums on the resale market. Reach out for a list of our preferred pool contractors.