It’s Always Something…Part 2

appraisal

First of all, remember that place at 857 Canis in Isle Cove that used an online auction company to sell it? According to that auction company’s website it sold for $564,500.05, (I guess it was that last nickel that pushed it over the top). Pretty interesting…particularly in light of the fact that there was a $40,000 assessment at Isle Cove and the winning bidder got to pay the auction company a 2% fee. Like I said, interesting!

One of the benefits of working with an experienced agent is that agent’s ability to be a guide through treacherous terrain. I’ve been doing this for 20 years so I figure not to be too freaked out by anything…but the truth is something totally new seems to come up every week now and it leaves me scratching my head. For example, I have a townhouse listing at 15 Violet Lane in San Carlos. The unit next door, in very similar condition yet smaller than mine, sold in 2007 for $917,000. We listed ours for $875,000, dropped it after 40 days to $839,000 then finally to $819,000. We got an offer of $750,000 and after going back and forth a few times ratified at $772,000. Seemed like a pretty good buy for the buyer to me.

As part of the process that all buyers go through who have a loan, an appraisal is done by their bank to verify the value. This is an entirely different animal in 2009 since lots of loud noise was heard in the last year about phony appraisals on sub prime loans leading to the mortgage meltdown. Consequently, most of the big banks won’t let their loan reps even speak to the appraiser who looks at the house…and there’s no arguing with their decisions either. Sometimes, the appraiser who get’s the job is from San Jose or the East Bay and may be quite unfamiliar with the subject community.

Here’s the problem…nothing has sold in the last year in the development at Violet Lane. Thus the appraiser has no relevant comparables and then uses other projects in town to finish his report. Guess what? Our appraisal came in at $750,000. Fortunately, the buyer and seller agreed to split the $22,000 difference and move forward to closing. This marked the first time in my career that I had a listing not appraise.

Last week I,and my clients, lost out on a sale in San Mateo Village that had 21 offers…largely because we didn’t write an offer with no contingencies. The winning offer had none. If that place doesn’t appraise, like Violet Lane didn’t, those buyers will have to make up the difference themselves in cash or lose their deposit. These really are different waters to have to navigate…and it seems like every day I’m hearing new stories too.

If you’re a buyer in this market be very, very careful when it comes to contingencies…and if you’re a seller please keep in mind, it ain’t over until it’s over!

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