Having an appraisal come in lower than expected can be stressful, but it’s not the end of the world! Overpricing occurs in every market condition for many reasons. An abundance of foreclosures in the neighborhood, an over-inflated asking price, and incorrect pricing by the underwriter can all contribute to this awkward situation. But what should you do when the price comes back below expectations?
You may request a value appeal to have the appraiser review their reasoning for not using the similar sales sent by the lender. There may have been an oversight by the appraiser, especially during the busiest seasons.
You can also coordinate with your lender to arrange a second appraisal. Hopefully, you can receive a higher valuation.
If the home’s price was too high to begin with, it’s usually easiest for all parties involved to simply lower the asking price to reflect the low appraisal.
If the appraisal is lower than expected, the buyer may not qualify for the terms in the loan contingency, making them ineligible for the purchase. As long as the purchase contract has been written carefully by a professional, this will require the seller to return the buyer’s deposit upon cancellation.
Of course, each situation is unique and is best navigated with the help of an experienced lender and realtor. Contact me if you have questions!
The real estate market is competitive right now, especially in larger markets like Los Angeles and San Francisco. A lack of inventory over the last several years has pushed prices higher and created a challenging environment for buyers who are often up against five, 10 or even 20-plus buyers all bidding for the same property.
For buyers who are just entering the market or for those who have lost out on one or several properties, here are a few tips for putting your best foot forward and successfully navigating a multiple-offer situation.
Working with a real estate professional who is experienced and who is an expert in the market can be a crucial factor in determining whether you will be on the winning or losing end of a multiple offer situation.
Follow what is happening in the market. Are homes selling over asking price? Are seller’s underpricing to encourage multiple offers? What are similar properties selling for? An experienced agent, who you trust, can help to determine appropriate value based on the current market trends and can assist in negotiations and advice throughout the process.
If you know, or suspect, that you’re entering a multiple-offer situation, you’ll want to come in strong from the very beginning. Some buyers try to come in low initially as a negotiation strategy; however, if the property is priced well and is expecting multiple bidders, you may not want to risk having the seller disregard your offer immediately for not being a serious contender.
Many agents suggest their sellers counter all of the offers in a multiple-offer situation, but that decision is ultimately up to the seller. They may choose to counter all offers, they may only counter a portion of the best offers, or they may decide to choose an offer after the initial submission with no counters at all.
One of the most important factors when a seller is considering multiple offers is their belief that the chosen buyer is serious about buying the property, and that they have the ability to meet the terms and close the sale. One of the best ways to do this is to come in strong right from the start.
Make your offer as clean as possible and package everything to be submitted together in a coherent way. You don’t want the seller or their agent to have to chase you for paperwork, signatures or proof of funds.
Unless you’re paying all cash, it may be difficult or impossible to come in completely non-contingent, though there are ways to make your offer more appealing.
If you need financing, are you able to put more money down? Is it possible, or are you willing, to inspect the property prior to having an accepted offer so that you can come in with no physical inspection contingencies? Talk with your agent about what works for you so that you can come in with your strongest possible offer.
It sounds simple, but many agents and their buyers don’t take advantage of this simple step. Another easy way to make your offer stand out above the others is to have your agent find out what terms the seller is looking for and meet those needs.
For example: Do they want a long escrow period because their next home won’t be ready yet? Are they requesting a leaseback? Do they want to close quickly because they have already purchased and closed on a new property? Price and financing are not always the number one concern to a seller, so meeting their other terms is another way to make your offer more attractive.
Create a Personal Connection. Can a personal letter really work? The answer is yes, depending on the property, adding a personal touch to your offer can have an impact.
If the home you are writing on is a new construction or remodel being sold by a developer, a personal letter may not hold as much weight as the offer amount and terms. But for someone who is selling the home their family grew up in, there is often a strong emotional connection.
You definitely can’t deny the emotional involvement of residential real estate. A home is an incredibly personal purchase and for a seller, letting go can be a difficult process. A personal letter to the seller letting them know how much you love their home and how much you’ll enjoy it and will take care of it may be just the edge you need to overcome another prospective buyer.
Taking the time to write a thoughtful note also shows your dedication to the purchase and ensures the seller that you are a serious buyer.
It’s easy to get caught up in the process when you’re vying for a property with 10 other buyers. Try to stay level-headed and make sure that you are completely comfortable with your offer and terms.
Talk with your agent and be sure that you’re not over-bidding just to win the property, only to feel you’ve overpaid once you enter escrow. You want to come in with your best offer possible, as long as it still complies with your needs and goals.
You’ve done everything you can. You came up to your highest price and your best terms and you still don’t get an accepted offer.
If you’re one of the top contenders, the seller may offer you a backup position. As first backup, you are first in line to get the property at your final offer terms if the first buyer falls out of escrow or does not perform. If you still want the home, backup position can be a great option.
It can be incredibly frustrating to buy a home in a competitive marketplace. Inventory levels are low and prices are high. It’s normal for buyers to lose out on several homes before one sticks.
Sometimes it takes a few times around to fully understand the process and what is necessary to win in a multiple-offer situation. Working with a professional who you trust and respect can help the process feel less daunting.
Give yourself a break if things get too overwhelming. It can be emotionally draining to lose out on a home you had your heart set on. Give yourself time to reset before taking the plunge again. Stay positive, focus on the big picture, and keep your end goals in mind.
This article originally appeared on the realtor.com® website on September 29, 2014. The article was written by Craig Donofrio and can be viewed in its entirety here under its original title, “Autumn Advantage: 4 Tips for Staging Your Home in Fall”.
A crisp chill in the air, the turning of leaves and the scent of pumpkin spice are all hallmarks of fall.
There’s no doubt it’s a beautiful season, and if you’re planning on selling your home by the end of the year, you can capitalize on all the good work nature already provides when staging your home.
You want your home to stand out when you put it on the market, so start at the curb.
To play up the fall feel outside of your home, clean up flower beds and rake any leaves off your lawn—the first thing buyers should notice is the changing colors on your trees, not the muddled dead leaves on the grass.
Add a wreath of seasonal plants on the front door for a finishing touch.
In the backyard, store away any summer items like pool floats, inflatable water slides and tiki torches. Add fall-related decor like a self-contained fire pit and warm-colored cushions on your patio furniture to create an outdoor space perfect for chilly evenings.
You can also add a pumpkin to the front stoop, but don’t carve it up because it will spoil much faster.
Remember to avoid using a pumpkin altogether if the weather is bitterly cold already, as it will rot faster—that will only attract flies.
Autumn’s natural color scheme is warm and earthy, reminiscent of cozy, fireside nights.
To bring some of that warmth inside for your open house, fill vases with red, orange and deep yellow flowers like marigolds, Mexican sunflowers or strawflowers. Place vases in the entryway, in the master bedroom and on top of mantles to add color throughout the house.
To make your home feel cozy and inviting, invest in throw blankets or pillows in the same shades as your floral arrangements. Place the pieces around your living room and bedroom to draw out the fall colors.
Add dried decorations, like dried wheat or dried cornstalks, to fill in empty wall spaces with that fall feeling.
The pleasant scent of fresh-baked cookies or a warm apple pie wafting through the house can trigger memories of comfort and home.
To tie in with the season—and the much-beloved holiday foods—light some candles scented with apple spice, pumpkin spice, cinnamon, cranberries or ginger spice.
Add warmth and a touch of the holidays to your kitchen or dining room by creating a cornucopia centerpiece on your table or countertop. Fill the centerpiece with gourds, miniature pumpkins and maize to help potential buyers picture themselves cooking their first Thanksgiving dinner in their new home.
While adding a bit of color and warmth will help buyers picture holidays ahead, keep your decorations clean and minimal.
Avoid overpowering a room with too many flowers and candles, and always remember keep personal items tucked away.
Even if the piece is holiday or fall themed, buyers like to picture their own decorations in a home.
There may be many reasons as to why your home is on the market and not selling, but some of the more common issues are listed below. Remember when you are selling your home, you need to take a step back and look at your home from a buyer’s point of view, not from what you think is acceptable. You have an emotional attachment to your home that will need to be put aside in order to make correct decisions when it comes to actually getting your home sold.
These 5 items can all be easily resolved with proper pricing. Even though you love living on a busy corner with shag carpeting and you don’t mind the bathroom right off the dining room, most people will not pay top dollar for your home with these issues. Any home priced correctly will sell, that is a fact, so please check with your listing agent to price your home accordingly.