This Sussex County, NJ, real estate agent has the great fortune to represent a couple considering a vacation/retirement purchase - completely discretionary. They were not tied just to one county but are mostly focused on New Jersey. Of greatest interest is farm-type real estate. Plenty of options here in the Garden State and I've recently toured many of them!
To match my clients' dream, I'll call them Mr. and Mrs. Farmer. They decided to make an offer on a property listed for 5 months. Naturally, I did extensive work on comps so that the Farmers had solid data on value. From the listing agent, I learned that there had been no offers. We had some excellent terms - all cash deal, hefty deposits, closing date to suit Seller's needs. Naturally, price was the stumbling block.
The listing agent kept stating that the price was based on an appraisal, so the price was really fair. My response, "I understand, but my buyers can only consider data to which they have access." I did agree that we'd be delighted to consider the appraisal - but only if we could actually see it! List agent got permission but forwarded just the cover page, which had the value and the date. Called the other real estate agent and explained that if she wanted us to review that appraisal, we'd need the entire document. She promised to forward the full report later in the day.
Meanwhile, I looked at the summary - dated mid-October 2008. Value was exactly the Seller's counteroffer, lower than the list price. Using MLS statistics from homes that had closed since then, I worked up an Excel spreadsheet. Values had dropped since October and using that documented metric with the appraisal figure, one arrived right to the number in our initial offer. (And less than our counter, which was called a "deal breaker.")
I shared this data with Mr. & Mrs. Farmer and faxed the listing agent both my spreadsheet and supporting GSMLS documentation.
All of a sudden, the appraisal was no good. The appraiser had not selected the right comps. The listing agent not only decided to withhold the details that had been promised, she negated what she stated was the fair basis for the Seller's price point. We were to ignore the appraisal summary because it wasn't any good. Furthermore, the documented declining values over 7 months from the MLS have no bearing; it wasn't what the agent "was seeing."
The listing agent would be sending me the comps she wants used instead of the appraisal she provided.
I don't think so... Nor did the Farmers...
- Did the listing agent shoot herself in the foot? You betcha.
- Do the Farmers think my initial comps were right on the money and their offer fair? That I did a fabulous job on their behalf? You betcha.
- Am I still weeping about returning the Farmer's deposit to them? You betcha!
Copyright © 2009, Irene Kennedy, all rights reserved. This blog post from www.RealtorIrene.com represents Irene's personal musings.
Considering selling a home or looking to buy one around Sussex County, NJ? Benefit from creative marketing, top negotiating skills and vast real estate knowledge by contacting Irene via the data to the right or www.HomesIrene.com.
Irene Kennedy, who is a NJ real estate agent with Weichert, Realtors, lives in Sussex County & works from the Hamburg office. Her primary market includes: Augusta, Branchville, Crystal Springs, Frankford, Franklin, Hamburg, Hampton, Hardyston, Highland Lakes, Lake Mohawk, Newton, Ogdensburg, Scenic Lakes, Sparta, Sussex, Vernon, Wantage. With her vast network, however, Irene Kennedy also can help you find an equally talented real estate agent elsewhere.
Wow...what a story. It is a bit whacked, I'd say. Amazing that the appraisal all of a sudden became no good.
whacko. I don't have enough patience for stuff like that....
Because it was an all-cash deal, the "appraisal" was based upon realtor comps. If the deal was based upon obtaining a mortgage, a bank would have done its own appraisal, ordered through its own appraiser. This is a requirement of FIRREA.
You could have engaged the services of a bank appraiser to establish current value. This would not only have conformed to current federal regulation, but also have eliminated the bikering. If either party disagreed with that appraisal, it would be subjective, and not realistic.
Hope this helps in the future.
Weep no more. M/M Farmer are your clients. They will remain your clients because they were well represented. They will buy something else that is better for them. Smile.
Even in an all cash deal a buyer should consider an appraisal. You were correct that in our current market an appraisal from last fall has no bearing on the value of the property today.
Larry,
It really bothered me that the listing agent had the audacity to fault the appraiser!
Maureen,
My patience increases with the size of the potential paycheck...
Marv,
No, the seller had gotten this full appraisal from a certified, reputable company before putting the home on the market. I don't doubt the integrity of the October work. It just was dated...
Thanks for your input!
Ron,
Your encouragement means a lot - plus you're correct. We've seen other properties of interest and probably will proceed when the Farmers come back from a vacation.
Cindy,
You have a knack of hitting the nail right on the head! I appreciate your time on a Sunday.
Irene, if your clients still trust your professionalism and you did nothing "wrong" you will move past this.
Gary,
Your visits always cheer a girl up! If anything, the Farmers trust me more than ever. Too, they brought their banker to see the property early on and had already chatted their attorney. So perhaps there are 2 new professionals who will think favorably of my services.
Plus we've had sunshine almost all day. Life is good!
Appraisals are subjective and definateley not timeless. An aggrivation to the extreme. Hate this stuff but bet your client are still solid. (hope). another day in the life
Irene - I would have done exactly what you did, excel spreadsheet and all. Although this is something the listing agent should have been doing over the past five months. There's nothing like keeping your seller's out of the loop on their houses true value.
Claude,
I still can't imagine what the listing agent was thinking - that we wouldn't notice the date? There is NO shortage of other properties that meet my clients' needs. While the seller isn't my worry, I do feel for her too!
As always, your visit is most appreciated!
Michelle,
We can suspect but who knows what was shared with the seller. Must admit that like you, I wondered if the listing agent forwarded my spreadsheet and documentation to the owner!
I've had sellers choose not to make any changes based on solid facts set before them, so perhaps that was the case here...
Irene, I'm sorry to hear this happened but you'll have some loyal clients in the Farmers....and all the Farmer's referrals that come your way!
I believe nothing can sell a good home better that the facts about it - good and bad. Also, I've learned the adage "that everyone has an opinion" applies very much so to real estate transactions, especially in todays' market.
Appraisals are only as good as the facts that they combine and the reasoning behind their analysis - what comparables were chosen and why is the key. But many factors may not included or emphasized - zoning, lot size, schools, community orgs... -, but may be why the buyers like the property
My main point is that the comparables used should be as similar as possible to the property in question. In most cases, there can be an appraisal review, if there is a question. Of course, this review must stand the tests of analysis and reasoning.
Good job on going the extra distance on the comps!
I'm finding it seems banks are often going 10-15% under market value in my area - and with a take-it-or leave it attitude. Is anyone else facing this in other parts of the country?
Carol,
From your lips to God's ear! Even the Farmers have faith that things happen for a reason.
Jim,
I appreciate your input! Never having seen the actual appraisal, I have no idea what comps were used. That doesn't change the fact that the list agent was touting it as great one minute and invalid the next.
Going that extra mile is just part of my job, but thanks for the compliment.
Haven't had the personal experience with the banks that you mention, but lots of folks here have posted about low appraisals impacting deals. So, you may be correct!
Irene, finding the magic number for rural property is truly a challenge. The "Farmers" are really lucky that you have a clue on how to do it. Oh, well. There'll always be another farm! Good luck!
"Green acres is the place for me..." That was one terrible TV series - don't know if you were ever subjected to it, Pat.
Thanks for the vote of confidence - I'm optimistic, given we had already identified some other prospects!
If I were the owners of that property, I certainly would be talking to a lawyer about their agent.
Todd,
You don't pull any punches! Suspicious me, I bet the sellers will never know about the spreadsheet and MLS stats... Wouldn't it be nice if they stumbled upon my post and recognize themselves?
Thanks for your visit!
It is sad that they probably never will realize why you walked away from this deal, Maybe if the listing expires, you can snatch it up and tell them the truth.
Have to agree with you, Todd, that the sellers probably are left clueless... Wouldn't THAT be a "happy ending" if I ended up with the listing! Let's not hold our breath, however.