Whether you are working with buyers or sellers you need to learn how to think like an appraiser. But how do you do that? In this post I will focus on “Thinking Like an Appraiser” when you are working with sellers.
As a listing agent you are constantly confronted with sellers who have a preconceived notion as to the value of their property. If you want to save yourself some grief I would like to make a small suggestion. Before you take the listing, and actually while you are at the listing presentation let the seller know how an appraiser will view their property.
For example, let’s say the seller believes their house is worth $500,000. They came up with this number because the house down the street sold for the same price and that house wasn’t as nice as theirs. Of course the sellers don’t have a finished basement or a garage like the house down the street, but that doesn’t factor into their equation. For some reason sellers always think their house is the nicest one in the neighborhood.
At this point you need to put on your appraiser’s hat. Let me give you a warning, you must be willing to walk away from the listing. Unless of course, your business plan includes trying to sell overpriced properties. But here is what you do…review the comps in detail with the seller. Tell the seller how the comps were compiled. Were they based on the past 4 months? Past 6 months? Let the seller know that an appraiser will be looking at the most recent comps in the neighborhood. An appraiser doesn’t care what sold in the neighborhood last year. Hopefully you have seen most of the properties that have sold in the area so you can describe them to the seller. You will want to focus on the properties that are “most like” the seller’s house because this is what an appraiser will be doing.
If we pick up our example again, the comps show that the property should be priced between $450,000-$465,000. You can explain to the seller that even if they did receive an offer for $500,000, chances are the house would not appraise, because the appraiser will be looking at the same comps you are reviewing. At this point the seller will more than likely have to reduce the price anyway!
Know this, the seller will not always go along with you, but it is your responsibility to at least go over this scenario with them. At this point it is up to you to decide whether to take the listing or not. Our jobs can be stressful enough so why put yourself through any added stress with a house you know won’t appraise? If you just think like an appraiser at the beginning of the process, you will save yourself a lot of time, energy and money! Be prosperous!
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Candy, “The Real-Life Realtor”, coaches, mentors and trains new and experienced real estate agents to transform their business by mastering her proven systems for success.
In 2016, Inman News named Candy Miles-Crocker as one of the Top 25 Real Estate coaches in the United States.
She is a firm believer in managing expectations.
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As an active Realtor licensed in three jurisdictions, I approach real estate training from a different perspective. With over 18 years in the real estate business, I teach agents what it’s really like to be a real estate agent.
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