It Sold, but Will It Appraise?

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Appraisal Graphic 2.jpgOnly yesterday you could trust a home that sold to stay sold.  Negotiating repairs was sometimes testy but rarely fatal, and after that it was straight on to closing.  Those were the Good Old Days.

Now its not enough to find a house, beat out multiple offers to win the house, and get through repairs.  After all that, we are all — buyers and sellers and agents — hoping and praying the house will appraise for the purchase price.  It may or it may not.  It’s a crap shoot.

Back in the Good Old Days before the recession, houses always appraised and nobody worried.  The definition of Market Value is “the price that a ready, willing, and able buyer would pay for the property.”  Well, a number on a signed Offer to Purchase means that a ready, willing, and able buyer is ready to pay that price, so that price is obviously Market Value.  Done!

Then came the housing bubble and the recession, and the appraisers’ mandate has changed.  Now they are required to calculate conservatively, sticking closely to the previous sales.  My first three sales this year did not appraise.  One buyer was under contract for $346,500; the house appraised for $328,000.  Another one was under contract for $450,000; the house appraised for $422,000.   Yikes!

An appraisal is nothing but an opinion — a professional opinion, but an opinion nonetheless.    However, lenders treat appraisals like facts.  They will loan the agreed-upon percentage of either the purchase price or the appraised value, whichever is lower.  And a second appraisal is not allowed.

So what happens when a house doesn’t appraise?  Depending on the personality and the financial means of the buyers and sellers, it can play out in one of four ways:

1.  The buyer brings more cash and makes up the difference.

2.   The seller lowers the price to match the appraised value.

3.    Buyer and seller split the difference — maybe not 50/50 but they both take a hit.

4.    The deal falls apart.

I’ve had all four of those resolutions happen.   Some variation of number three is the most common, but that doesn’t mean we get there without drama and angst.

Inventory is short, which means the Law of Supply and Demand would push prices up more quickly if  appraisers weren’t holding them down.  Still, every time a house sells and closes above appraised value, that creates a new comp that will help the next home in that subdivision to appraise for more.   So appreciation is happening, just more slowly.   That’s good in a way — nobody wants another bubble.

But it’s tough on sellers who want the best price, and on buyers who need to get a loan.

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Remodeling Isn’t As Easy at it Looks on TV

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I don’t usualy watch real estate shows on TV but when I’m having my nails done I am a captive audience to whatever is playing, usually HGTV. Often the show involves massive remodeling. and voila` everything gets done in half an hour! Smiles and happiness all around!

My friends, those are not reality shows. They are fanatasies.

Remoding a kitchen, much less a house, takes FOREVER — as in, several months of disruption and inconvenience. I don’t know anyone who wasn’t emotionally traumatized by the experience. Before you are even out of bed in the morning, strangers are banging around in your house. Periodically they stand around and frown. Then they disappear, without explanation, for days at a time. You eventually find out they are waiting for something to be ordered or delivered or built or cut. It’s your own fault, clearly. You’re the one who wanted things customized.

Plus, you have to expect surprises during a remodel. The builder or previous remodeler cut corners. The electric isn’t to code, the plumbing makes no sense — these things have to be fixed. Your original budget turns out to be just a down payment. Your contrator is sympathetic, but unyielding. The price you started from is not anywhere near the price you are going to end up paying. As for the estimated date of completion, that will come and go.

Ideally, once the project is done, your joy will instantly erase all memory of what you have suffered. But you may also end up being scarred for life.

Just saying.

Memories: The First House I Ever Sold

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I have a new listing in Scotts Mill, a wonderful craftsman-style neighborhood in Apex, NC. After my Open House last Sunday, I drove to revisit a particular house.

I was new in real estate when Scotts Mill was being built, and the first house I ever sold was in Scotts Mill. It was new construction in 1998. Like many of the homes, its elevation was a replica of one of the classic homes in Downtown Raleigh.

The custom builder team left a lot of trees, as you can see from the photo. I remember it was hard to get a good picture for the MLS and flyers, when my clients later moved up and a few miles away, to a larger home in Abbington.

I’ve sold a few hundred houses since this one, but you always remember your first.

How Fast is the Market Moving?

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How fast is the housing marketing moving right now?
On Friday a first-time buyer sent me a list of homes he wanted to see when we went out on Sunday. There were ten properties on his list. I told him ten is too many — eight is the max that stamina and sanity can endure. So he sent me three addesses to omit, in case.
I needn’t have bothered to pare down the list.
Saturday morning when I printed out the listings, all ten were Active.
Saturday afternoon when I called to make the appointments, two were under contract and one declined without giving a reason. So I added the three omitted ones back in. We had seven to see.
Saturday night late I got two messages — two more properties had gone were under contract.

Now we have five to see and I feel like we’d better hurry before there are only four or two or none left.  How fast is the housing market moving right now? It’s giving me whiplash!

Pink Pens by the Box

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I love these pens so much, I buy them by the box! Here’s why:

1. They write smoothly.

2. The rubbery grip is comfortable.

3. Pink is pretty.

4. Nobody steals them, and nobody forgets to give them back to me.
They’re too distinctive, and for men probably too pink.

5. These days pretty much all real estate documents are scanned and emailed to the various parties, so everything hand-written needs to be dark.  I wrote a blog once about “wispy” signatures that are almost invisible when scanned. These pens have a medium point and black ink, which ensures that my writing will be legible, even when scanned.

6. When I meet with clients to do paperwork, I don’t leave home without at least three of these pens. I have my clients do their intialing and signing with them.  It’s important that their signatures and initials will also be legible when scanned and emailed.

7. I consider these pens a promotional item.  If a client has the good taste to admire my pens, I give them one. It may not have my name on it, but they’ll remember me whenever they use it, and think of me fondly : )

8. These pens write until they don’t. No skipping and stuttering. When the ink is gone, they quit. But not before.

8. 60 cents from each box sold goes to the City of Hope for breast cancer research. I’m doing my part, because I have bought a lot of boxes!

You can find pens that are cheaper, but I love these pens. A product that works well and is aesthetically pleasing — that justifies a higher price.

These pens are worth it.

SPEED DATING LOCAL BUILDERS

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Had a good time this morning “speed-dating” a dozen local builders at this month’s meeting of the Raleigh Chapter of the Women’s Council of Realtors. New home construction has really taken off again after the long pause 2009-2013. It’s hard to keep up with all the new communities out there, so this was a great way to get an overview of what’s available and what’s under development.  And if I win one of the gift card giveaways, so much the better!

The Master Stager — Spring!

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There’s a reason that Spring is high season for buying and selling houses.

“Add color!” my stager is always saying. We mortals can stage the interiors, but it’s Nature that stages the yard with all the colors of spring: white dogwoods against a blue sky, yellow forsythia, and stunning azaleas from a palatte of reds, corals, and lavenders.

Every home looks its best set amid flowers. Mother Nature knows what she is doing, when it comes to staging!

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