I wrote a blog post earlier about appraisals, and what we as buyers agents can do to help our buyer clients to understand current market value and to avoid appraisal issues.
One of the comments I recieved said something like "You may not make the sellers happy..."
I'm a nice person. I like to think that I'm an easy agent to co-op with, and that I do perform my duties with care and diligence. My brokers have never received a complaint about me, nor do I ever expect them to. However, being nice and co-operating with the sellers agents doesn't mean that I won't do my job to the best of my ability for my client - the buyers.
My fiduciary responsibility as a buyers agent is to my buyers. When they find a home they wish to purchase my responsibility kicks in to high gear. I will analyze the current market for them and present them with all of the facts that I have on hand. They will then be able to make an educated decision about the price to offer for the home. I will then take their offer to purchase, along with my data and present it to the sellers.
Not long ago I heard these words from a sellers agent after my buyers offer was presented to them: "My seller is a nice man. He's worked hard, and his home is in good shape. He really deserves a better offer and isn't happy with this one."
My reply? "I'm a nice lady. I work hard. My home is in nice shape. I deserve good things to happen to me. But my home is still only work XXX and it wouldn't appraise for more than XXX, and I surely wouldn't expect a buyer to pay more than XXX."
My buyer didn't overpay for that home, and we moved on to find them another home.
Listing agents need to keep their sellers in the loop. Sellers need to know current market values. They need to understand the danger of overpricing their home, and have realistic expectations of a sales price. All sellers deserve this information from their agents on a regular basis - not just the nice sellers :-)
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Regarding appraisals, I've never ever understood how or why an appraiser is informed of the offer price of a home before they do their report.
Kris, this is a very interesting post. I've had sellers agents say the same thing to me. They've also said things like "You know, my sellers don't really HAVE to sell." I don't get it! Then why put everyone through the trouble!
Realistic market evaluations are key in this market, and I've started including a comp report with my offers to purchase for buyers. I don't say anything, just let the data speak for itself!
I agree with your post and I always think that it's hardly worth a reply when a seller's agent says something like this - it is so obviously grabbing at straws and makes no sense. We all know that the house has to appraise and if it has been priced without regard for the current market values then it won't matter if we bring a buyer who absolutely loves the place and wants to be self-sacrificing and give the seller every penny that he believes he deserves. For the appraiser on the other hand, and the bank, it's just about the facts.
I work with sellers and buyers. I find that in my area sellers are getting more and more realistic about the situation. Last year all I heard was "forget it, I'll wait because I'm not giving my house away." This year I am hearing more comments about the reality of the situation and they seem more willing to price reasonably.
The biggest problem I find is that when working with buyers, and even when we find a great property that is well priced, the buyer frequently misses out on the opportunity because they waste time making lowball, unrealistic and unsupported offers. Once a seller "sees the light" and prices according to the market, like most of the bank owned properties, most of them don't intend to, nor are they able to, entertain ridiculous offers.
Buyers need to remember that we WANT them to be happy because we want to work with them in the future or recieve their referral business. I wish that buyers could understand that most properties sell for market value -- no more and no less.
Carlos, It would be interesting to ask an appraisor that question. I don't know the in's and out's of what they need and why.. BTW, I love the TreeHouses4rent site and concept!
Melissa, I call the report "ammo" if a home is overpriced. It's hard to argue with solid data. Years ago we used to hear "my seller doesn't have to sell". Not so much anymore. Sellers who don't have to sell (or are highly motivated to sell) are waiting out this market.
Stephanie, I'm like you. I preach "appraisal" to my buyer clients from day 1. In fact, if a home is grossly overpriced I caution against even viewing it. If a seller is going to be unrealistic from the start it usually doesn't end happily for the buyers. I want them to be happy. I will work hard to get them any house they truly want. I do temper my advice though with caution and make sure they are educated throughout the process. Thanks Stephanie. Buyers making low-ball unrealistic offers are something I really haven't encountered. Perhaps I've been lucky.
Tom, Thank you. Good to see you.
Hi Kris - Well said. In a down market I tell my sellers that they have to treat every offer like gold as they don't know when the next one will arrive.
I have taken offers that a seller has refused and then see the listing sell months later at a price lower than my buyers offered.
You are right. It's the seller's agent's responsibility to keep them up to speed on market conditions. Not many sellers are REALLY REALLY happy with the offer they accept for their house but the next day they are usually relieved and happy that they accepted it and can move on with their plans.
Thanks for the post it has provided me with good information.
Kris, I loved your reply. I can't believe how someone can try to twist things sometimes and turn you into the 'bad guy.'
Kris, I loved your reply. I can't believe how someone can try to twist things sometimes and turn you into the 'bad guy.'
Agreed. "Market value" and "happy" don't necessarily go hand in hand. How "happy" is the seller going to be if you actually agreed to a price that made him "happy" only to find out 4 weeks later that the property doesn't appraise.
It would be interesting to ask an appraiser that question. I don't know the in's and out's of what they need and why..
To answer your question ...
To make sure that the seller is the owner via a check of public records..(remember that not all sales are thru Realtors and we have seen some real shady stuff going on)
We are required by the form, in fact it is the second section of the report on the 1004-2005 appraisal report. To see a sample of a report just google appraisal form 1004-2005 and you can see it for yourselves or click here (you may have to copy and paste). https://www.efanniemae.com/sf/formsdocs/forms/pdf/sellingtrans/1004.pdf
Also, USPAP requires us to examine and report on the contract as does freddie and fannie.
With that all being said, there are many of us who agree with you about the contract being utilized as a ""target number"".
Great Blog Kris - it's not about being nice or NOT nice it is about getting the right house for your client at the right price - good for you...
I continue to be amazed at the number of sellers that are kept "out of the loop" in negotiations. Sure, it's nice to run interference for them, but our job is to make them aware of all requests from the buyers or their agent. We just ran into a situation where the buyer (unknown to me) contacted the seller directly because the listing agent insisted that certain negotiation points were not negotiable. The buyer and seller got everything worked out and the seller's comment was "why didn't my agent tell me about these things - they are so simple to address..."
Hi Kris,
Great post, it is right on point. Thanks
I agree! My problem lately has been sellers who get all that info and ignore it anyway...time to jet them!
It is never easy to tell your best friend they have an ugly baby, and it is not easy to tell someone their home is worth less than what they think it is. In their head, they're not hearing it is worth less, but worthless. On top of that, the listing agent is banking on having that extra money from this sale to get that seller into another home - that is the next deals down payment.
The sooner sellers get introduced to reality, their kid is ugly . their home has lost $45k in 2 years, then sooner they can move on with their lives.
Strange isn't it....as if we are all neighbors and the goal is happiness for all.
In all the years I have been in business, and all the appraisals I have seen.....I can't find the box marked "Sellers are very nice" or "Sellers aren't happy" and a place to adjust the values for either of those items.
Maybe I am missing something?
When Sellers say I am going to hold out for my price ( which is way too high) ...I just tell them, "The bank will hold out for their appraisal too ".....The one with the money always wins.
Hi Kris, Your post is excellent and should help educate some seller's agents. It also seems like the other agent is taking your ofer personally.
It seems that you always have an adversarial attitude toward the sellers agents? Hmmm, maybe the deal didn't go together because of you? Had nothing to do with the comps, if you provided the correct ones, to the buyer possibly? Just being devils advocate here as there are always 2 sides of the coin right?
I always keep my sellers in the loop as far as market values, market trends, etc. and 20% off list because a buyers agent recommends it, isn't going to happen either! I think you would sell more being more flexible.
This again shows the importance of a buyer using a "buyers agent" instead of calling the listing agent! Great post!
Jenny, It's hard to understand why any seller wouldn't at least counter offer, but I see it time and time again. Listing agents by and large to a nice job educating their clients, but some "sugar coat" reality and that hurts the seller in the long run.
Rebecca, You're welcome.
Carole, I've developed a pretty thick skin over the years, but I really don't like being a "bad guy". I'm simply a thorough buyers agent.
Catherine, In those cases the seller surely isn't happy when the deal falls apart.
Anthony, Thank you for the explanation, much appreciated! I'll refer to your reply if I am asked this again.
Kathy, I'd like to think I'm nice about it (as I'm explaining realty) but sometimes all the seller can see is the purchase price and not "hear" anything else.
Weichert, Wow. I bet the seller gave their agent an earful.
Ron & Alexandra, Thank you. Good to see you.
Vanessa, We can't help people who are unwilling to see the truth.
John, All babies are gorgeous! (But I get the analogy :-) You're right, get the truth out up front and give the sellers a chance to digest it.
Karen, In a perfect non-business world I would love to make everyone happy. But I can't make the sellers happy AND represent my buyers faithfully.
Larry, Hahah! I haven't seen that box either :-)
Bill, When I heard that from the other agent my first thought was "He didn't tell the seller the truth about the market.." and now has to cover himself. Not my problem or my buyers problem.
Lyn Sims, Actually, I'm the least adversarial person you'd probably run across. But then again, you don't know me. The buyers were given the comparable sales, recent ones. They made an excellent offer (right at or even slightly above the comps to compensate for the nice condition of the home). Seller wanted $20,000 more. How is my presenting the offer, a sound offer, adversarial??? The home the buyers eventually purchased was priced well and they came in to within $3000 of full price. Seller was happy, buyer was happy, lender was happy. BTW, the listing agent on that home did a great job educating the seller about the current market value. The first agent grossly overpriced the home. Seems to me that was adversarial - to their client. Edited: Again, you don't know me, so your last sentence was uncalled for. Making a sale or representing my clients fully? "I'll take representation for $100 Alex.."
Terry, Thank you. Much appreciated.
Carina, That makes sense. Thank you so much.
Larry said..
In all the years I have been in business, and all the appraisals I have seen.....I can't find the box marked "Sellers are very nice" or "Sellers aren't happy" and a place to adjust the values for either of those items.
Its usually the buyers are very nice.... comes on the order form for the appraisal
as for Sellers aren't happy comes on the stip sheet asking the appraiser to find new comps or why can't you use these comps...??
Carina is right for adding in the comment about sellers concessions. If a copy of the sales contract is not available then it does get noted on the report, along with the steps the appraiser went through to try and get it.
We had two situations like this last year where the property did not appraise and our buyers (of course) refused to pay more. You could hear the sellers and their agents screams of outrage against us for miles. We eventually bought both homes for the appraised value but the folks on the other side felt we were not being fair or "kind". We were kind, considerate and polite during the whole transaction, but as you say...our duty is to obtain the best terms for our buyers...and that is what we eventually achieved.
Good post about keeping it realistic. Buyers are not charities to make sellers happy.
Tony, Thanks for adding that. I do know that sellers concessions are important in determining true market value of the home, and thankfully our MLS has it as a mandatory reporting field. The appraisors have access to this as well as the agents (and their sellers & buyers)
To anonymous: I'm nodding my head as I'm reading your response. No matter how polite, kind, and informative we are, we are sometimes called "adversarial" by sellers agents and their sellers. We, nor our buyer clients, are responsible for the market value of the homes. Yet we will most certainly hear about it if the offer comes in for market value and/or the appraisal comes in reflecting market value. Thankfully there are wonderful sellers agents out there who are talking to their sellers and keeping them informed so these "surprises" are few and far in between.
Gene, Loved your response. Thank you.
Realistic is one of the most important assests to a real estate professional. There are times when we just can't get through to the seller..... In those inflated price cases I politely decline.
We have no control over the appraisals. We can even now barely give appraisers comps. But an offer made on the FMV of a home isn't mean, it's reality. The listing agent probably couldn't stand up to her seller and tell him that the price he wanted was unrealistic and probably didn't prepare him for lower offers. I just had an offer go to escrow where the list price was $299K and we got it at $265K. Based on comps, the $299 was REALLY high and not realistic. I softened it with comps and said that tit wouldn't appraise at the $299 based on this and this selling. The sellers agreed.
You are right. I received an email form a seller in NJ asking about his home's current worth. I referred him back to his agent.
Don't get mad at me as a buyer's agent when I bring you this offer. Get mad at the agent who shows your house and doesn't bring you an offer. That agent has wasted everyone's time.
You do not have to accept this offer, but if I don't present it you have no opportunity to make a decision. You can accept, reject or counter, but nothing can happen without the offer.
Never get mad at someone who is offering you money. It might not be enough to get the job done, but it's nice to know someone else values your house and is willing to go to the trouble of making an offer.
Akron, Ohio
Sometimes those sellers can't understand why their home should get so much more than the others. Great post, thanks for all the insight!
When listing agents try that I always wonder if it's ever worked for them. Certainly wouldn't work in this market. Even if he found a buyers agent to fall for it, there's still that appraisal issue.
I always cringe when people tell me to make my clients and tenants happy. I can usually do the first by renting their property and sending them $$$. I have never tired to make tenants happy.
Kris,
Great post! I have had listing agents argue with me over price. My buyers moved on bought a house and the overpriced listing is still sitting there....
Ann Hayden in Wildwood, MO
What always amazed me is that sometimes when an appraisal comes in short of the sales price I have the selling broker busting on me along with the buyer..??
Quick story about contracts....
about 2 years ago I had an order to do a sale in an area where values were falling. The contract showed a sale price of around $395K. The subject was listed for sale at $410K. Did a quick search and found the subject had an expired listing (exp was a week before the new listing) with a final sale price of $365K. Hmmmm....called the agent from the expired listing and started talking about the dwelling. He was just as befuddled as I was saying that something is going on. Read through the contract, added up the down payment, the loan amount and the sellers concession...hmmm...still missing about $35K.... Show up to the house and do the report. Comes in about $345K...
Send the report in and you know what hit the fan...had to deal with 10 sales thrown at me...Funny thing, I looked at all of them....none where similar (surprise??).
About 3 weeks later they send me more...I take a look (UGH). They show me 2 that I missed. I look at the MLS report and hmmm, how could I have missed them? I started to question myself on them and for S&G I jump to the public records for each...Wait a minite...Public Record says that they closed about 9 moths ago...I double checked on a second Data Source...shows title transfers 9 months ago...yet the MLS listing date says a month ago. Called another appraiser asked him to look at the records without telling him about the other issues...he comes up with the same info...I tell him to check the listings...same result...
Anyway...I like the having of the contracts as they add to the diligence of the appraiser and in the end the report.
Sorry for the long winded comment..
Hi Kris - I just came back to congratulate you on having this post and your profile featured in the AR daily newsletter today. Keep up the great work. :)
I always convery to buyers- I won't take a listing that is over priced... that does notmean other agents won't... a list price is a guide- not a price tag... And if I can't validate the list price- then clearly it is over priced. Always weigh the good with the bad...
Again, the Agent got emotionally involved in the transaction! What would be said if the Seller was a nasty person?
Amy said...
We can even now barely give appraisers comps.
I am not sure where you get that from, or what kind of appraisers you are dealing with. Wheever I set up an appointment with a broker, I have no propblem with them showing me comps. You never know, they may have something that I missed...
Well said. In this market, I'm sure there are an awful lot of nice people who aren't at all happy about the value of their homes today. But that isn't your fault.
Sally, I wouldn't take an overpriced listing either. In my opinion, when you do so you are giving approval to the seller for the listing price, whether you tell them it's overpriced or not.
Amy, That's exactly what I do. The buyers want to see the comps before they write their offer. And in cases where it is grossly overpriced (as in your case above) I am sure the seller will want to know why the offer is much lower. Giving them the information (when the listing agent didn't) provides clarity. Glad your buyers got the house!
Gary, Ouch! I bet that shocked you. You did the right thing.
Thomas, "Never get mad at someone who is offering you money". I like that! What a great way to put it.
Kim, Thank you. For the most part sellers get it, othertimes they just don't want to believe.
Joetta, You're absolutely right. It does not work in this market.
Wallace, As I said above - in a perfect world it would be wonderful to make everyone happy. But this is a business world in real estate and I don't think that's possible each and every time.
Ann, The overpriced listing that I talked about is still on the market (or was as of last week). It's frustrating when we see that happen isn't it?
Anthony, Your story makes me wonder...if it was one home that was incorrectly reported (the sold date), but two? Where they sold by the same agent or office? Just kind of odd that this happened, it would certainly make me perk up if I was an appraisor looking at that data. Thanks for sharing this with us.
Jenny, Thank you :-) It's always good to see your smiling face!
Shanna, That's a great way to put it! Buyers are smart. They do their homework, and with our data to back them up they know when something is grossly overpriced.
Kathy, You are absolutely correct! The agent did appear to be emotionally involved with the transaction - and the seller. I have no idea what his response would have been if the seller hadn't been a "nice person" :-))
Anthony, I think that comes from HVAC guidelines...or a misinterpretation of them. I have heard that myself, but as I'm normally on the buyers side of the equation I don't even consider providing comps.
Marte, No it isn't, nor other agents fault either.
Wallace, As I said above - in a perfect world it would be wonderful to make everyone happy. But this is a business world in real estate and I don't think that's possible each and every time.
Ann, The overpriced listing that I talked about is still on the market (or was as of last week). It's frustrating when we see that happen isn't it?
Anthony, Your story makes me wonder...if it was one home that was incorrectly reported (the sold date), but two? Where they sold by the same agent or office? Just kind of odd that this happened, it would certainly make me perk up if I was an appraisor looking at that data. Thanks for sharing this with us.
Jenny, Thank you :-) It's always good to see your smiling face!
Shanna, That's a great way to put it! Buyers are smart. They do their homework, and with our data to back them up they know when something is grossly overpriced.
Kathy, You are absolutely correct! The agent did appear to be emotionally involved with the transaction - and the seller. I have no idea what his response would have been if the seller hadn't been a "nice person" :-))
Anthony, I think that comes from HVAC guidelines...or a misinterpretation of them. I have heard that myself, but as I'm normally on the buyers side of the equation I don't even consider providing comps.
Marte, No it isn't, nor other agents fault either.
Kris,
To answer your question about those sales....It was the same brokerage house...and, get this the same broker. I went into the history file of the listing and found that the data was changed several days before they sent me the new comps.....I do not beleive for a moment that it was a accident.
Kris,
I believe the listing agent is doing their sellers a disservice. The house is only worth what a buyer is willing to pay and the bank willing to loan. The appraisal would have been an issue...
Ann Hayden in Wildwood, MO
One of my favorite phrases that sums this type of listing agent response is "don't try to make sense out of nonsense."
I agree-- the Market does not care about anyting but what a BUYER thinks its worth- no matter if it is a car- boat or your kid -- ))) Yeah-- what is up with appraisers getting to see the offer price before they do their job- I thought that the offer had no bearing on the outcome result- BUT it does- I have had many sales this year where the appraised value was the EXACT same amount as the offer price-- even if some of them were priced really low compared to others in the neighborhood-- then buyers look at us and think they are not getting any good deal unless it appraises for much more-- whats up with that- any good words to say besides the appraiser is afraid to loose his license and he is just doing a CMA-- Cover my a______ !! thanks
Anthony, Now why did I think that was going to be your answer to my question? Ugh...that should not be happening.
Ann, I felt the same way you do. Thanks Ann.
Beverly, I love it! I may have to borrow that phrase in the future :-)
Darren, This is one of the reasons that I counsel my buyers to not be surprised if the appraisal comes in at the exact amount of their offer price, or within a couple of hundred dollars. Only once in the last year did an appraisal come in several thousand over the price.
Ah, yes, the old play-on-the-emotions tactic. I love it when I hear that the Seller is 93 years old and has lived in his property for 40 years, even built it, so he deserves a better offer. In my mind, since he built the property himself and has lived there for 40 years, he certainly has gotten his enjoyment out of the property and probably owns it free and clear. And just how much longer will he have to enjoy the extra $10,000?
these thoughts come to mind:
Russel, your story made me smile. This type of thing happens all too often. Thanks for stopping by, it is always good to see you.
Dana, Your 2 thoughts that came to mind are right on!
How funny, sad, and true that that is funny, sad, and true all at the same time.
Well said Kris. If the Seller is too happy, I've failed my Buyers.
I have to hope that some of these seller agents are saying these things as negotiation tactics. However, I do believe many are believing their own BS, which hurts them and the seller and wastes everyone's time.
You're right, an educated seller and buyers are the best to have.