Cleveland Real Estate News

The market has been hard on sellers or would be sellers. We know sale prices have dropped over the years. But there are still some sellers who wind up setting themselves up for disappointment by listing their homes at a price not supported by the market.  The reason? Appraisals.

Appraisals are done by mortgage companies when buyers apply for a loan on your home.  Since sale prices are all over the map (you might find sales from $55,000 to $120,000 for same style, square footage and neighborhood of homes, because of lower sale prices and of course, foreclosures).

There are a lot of reasons why homes get listed too high but I’m only going to talk about scenarios that can be controlled.  In other words, you don’t have to sell.  You’re not getting divorced, moving out of town for a new job, etc.  You just want to see if you can sell your house and buy another one.

So you list it higher than your Realtor® recommends. You know buyers are going to want to negotiate. The problem is, care has to be taken to make sure that listing price is still within market value.  Why? You could have a contract in the works.  The buyer has applied for the loan, turned in earnest money, the inspection is done and everyone is happy.  Until the appraiser comes out and turns in a report saying your homes market value is  lower than the agreed upon sale price.

Now it’s true, the buyer can legally step up and put down more money on the house in order to not be borrowing over the price acceptable to the appraisal. But in reality, most buyers want their extra money, if they have any, to be set aside for any unforeseen expenses that come up in the first year.  This is reasonable, but doesn’t help you sell your home.  In reality, if the appraisal comes in lower, unless you are willing to admit the house sale price should be lower, it probably won’t sell.  The contract will go bye bye.  At least in NE Ohio, this is what is happening over and over again.

I guess my suggestion is this.  Even if you need to move because of a hardship like a new out of town job, consider renting the house if you can’t sell the house to pay back your original mortgage price.  Or if you can’t sell it for what you want to eventually get out of it.  Many people are in the market for single family rental homes; many already rent town homes and condos; the market is beginning to adjust a bit, so in a few years, you might be able to get more for your house.

At the very least, don’t go through an exercise in futility by listing your home too high, setting you and your buyer up for a disappointment at the end.  Just sayin’.  Peace Out – 3C