The last 2 weeks have been interesting, in 2 separate offer situations with the same buyer the sellers have had unrealistic expectations on what they feel their home is worth. I truly believe it is the responsibility of the listing agent to make their homeowner aware of what can and cannot affect the value of their home. It is also the listing agent's responsibility to go over comparables and what can happen at appraisal time should they find a buyer willing to overpay for the property.
In the first offer situation the seller told his agent to absolutely stop telling him that the bank determines the value of the home with an independant appraisal. The seller then countered us with removal of the appraisal contingency and the guarantee that my buyer would pay the difference between the appraisal and the contracted purchase price. I would guess the seller realized that the home would not appraise and obviously this became the deal breaker for us and we walked away from the deal. This is why buyers have appraisal contingencies and banks order appraisals.
In the second offer situation the seller is so overpriced and has been on and off the market for over 14 months. The listing agent is trying to explain to me how I am incorrect in determining value, but the fact is if it hasn't sold in the last 14 months there is a reason - PRICE!
I had an appraiser many years ago explain to me on what they do in determing value. This is also just one part of it not all of it in determining value, and there are different methods of value. Examples would be highest and best use, cost of replacement, etc. So let's begin . . .
First - like/same. What does that mean? A ranch/rambler or one level home will be compared to the same. A basement will add to the value, no basement will take away depending on whether the subject property has a basement or not. It will not be compared to a 2 story colonial or a contemporary.
Second - square footage. The appraiser compares square footage adding and subtracting value to the subject property.
Third - upgrades. Please understand if you replaced a roof, furnace, central air, water heater, etc these are not upgrades as these are necessities in a home. You can't sell a house without a roof. The biggest mistake is the homeowner over upgrades their home. I once had a listing where they laid marble floors in a $130K home, no one cared. What happens is the homeowner is disappointed or sometimes even gets angry when the buyers don't find it an important upgrade.
There are many many other factors that go into an appraisal including neighborhood values, etc. This is just a small part of the appraisal process.
Now, attracting buyers - please when painting take into consideration your colors. You may love electric blue but most buyers won't. The same goes for selection in flooring. Don't cheap out! Pergo or laminate flooring is nice but it is not a replacement for hardwood flooring. Buyers love hardwood floors. You might just be better off installing carpet if cost is a factor.
Please understand, when you price your home $80,000 over everything else in your neighborhood, even if I had a buyer who would be willing to pay for your over priced home - IT WON'T APPRAISE. Appraisers calculate based on actual 12 month sales and active listings (foreclosures and short sales included). The end result would be a reduction in price or even worse the buyers would walk due to buyers remorse given the opportunity to change their minds.
The appraiser works from what is real not what is the seller's perceived value. Mr. Seller, I as a buyer's agent know that listing agents have a trick that they withdraw the listing and then re-list the home with the new lower price. The home is then reflected as a new listing on the market. FYI, a good buyer's agent will check the history and we see everything that has occurred with the listing. We will see those 365 days you have been on and off the market. I do really want to sell your home to my buyers but no one will over pay for your house in this market.
My buyers have been heartbroken but I will find that dream home they want and at the right price!