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A party has put earnest $ down on our house and has countered with a lower price on the house than we want to accept. Our realtor seems to think that we should take the lower offer as he feels the price we have on the house is too high and an appraiser may not appraise the house at our asking price. Any suggestions?
It's a buyer's market right now. It all depends on the house you're selling and how long you can afford to wait (and how little you can afford to accept).
I'd not listen to your realtor if you feel like it's a competitive price. Your realtor's main interest is getting your house sold, period. Their 1.5% of a $10,000 swing in price is only $150; not worth waiting (or working) for.
Current time on the market for homes in the metro area is, I believe, on average about 2 months. If you haven't waited that long, wait some more if you can afford to.
With negotiations, budge as small an amount (not zero) as you can. Hopefully you thought ahead enough to start at a price higher than you're willing to accept.
A party has put earnest $ down on our house and has countered with a lower price on the house than we want to accept. Our realtor seems to think that we should take the lower offer as he feels the price we have on the house is too high and an appraiser may not appraise the house at our asking price. Any suggestions?
Annette
Greetings,
Without knowing all of the specifics of the transaction - my advice is do nothing.
If the deal does not move forward you get to keep the earnest money.
I certainly wouldn't do what your realtor is suggesting.
A party has put earnest $ down on our house and has countered with a lower price on the house than we want to accept. Our realtor seems to think that we should take the lower offer as he feels the price we have on the house is too high and an appraiser may not appraise the house at our asking price. Any suggestions?
Annette
As the others have said, it depends on the market. Your Realtor just might be right.
Has your Realtor done a competitive market analysis on your property recently? It compares your home to like homes on the market that have SOLD recently. If yours is out of line with these, the appraisal will most likely come in lower than the asking price. If your buyers have to get a loan/mortgage, the lender will only lend up to the appraisal price.
You have several choices. Not knowing your market, how long the house has been on the market, how many other offers (if any) have come in...it's hard to say.
And no, you don't necessarily get to keep the earnest money. It depends.
From what I have read in the ABQ Journal, the market in parts of ABQ has slowed quite a bit.
I have bought and sold quite a bit of property now in the last fifteen years. The whole appraisal industry is a mystery to me. I have had sellers want me to agree to another appraisal when a low one comes in. What does that tell you? Let's just run out and make up things. On my recent purchase, the comparable homes they listed were supposed to be within six miles or something of this home. No way...I don't know what odometer they were using. Also the home I just purchased had no exterior stucco on it (just a painted cement scratch coat), so when I asked the appraiser if that would impact the price, his response was "it looked fine to me." My question was, when I finish the house will it be worth the thirty thousand more? No answer. I don't mean to go off on that industry but to me it is a smoke and mirrors game that is strictly designed to help the lender and even then, I don't think they help them really. I have had appraisers ask me when I am selling, "what price do you want?" Oh, brother.
As to what you should do-its all about whether you need to sell now or you can wait.I wouldn't get wrapped up in what an appraiser might say. No one in that industry can predict what they might say, I assure you. And, even if they come in at a low price, you can re-negotiate and if the buyers really wants your house, it will work out. Now, if they want a fire sale that is different. Really, you price it according to what has sold in your area and that is what it is worth at this moment.
One thing about my area (El Paso) and yours is that we are being inundated with new building. That is our competition. People in our part of the country don't see thirty years of mature landscaping and a forty foot pool in the yard (try to pay for one of those now), or solidly built homes. Rather they see it doesn't have granite counter tops.So, when my house goes on the market again, it will have granite counter tops and all the other little bells and whistles that people like but its going to be listed at a much higher price than if somebody bought it now. I think that uncontrolled growth that I see in El Paso and Dona Ana County is going to hurt us as owners for a long time to come.
Lots of homes that were put up just two or three years ago in far east El Paso, are slums waiting to happen. They were poorly built with insufficient lot size. They have very high density with insufficient off street parking. Those properties are a maze of cars parked all over the streets and the front yards. You cannot convince me that is smart growth. It may be necessary because of a booming population but to never implement or even consider long term planning at some point, is simply criminal.
Finally, check Zillow.com. Appraisers generally hate Zillow. I think it is a nice free little service that you can check your area by what has sold and see how your pricing is. They give you a range but you can kind of figure out what your home would reasonably probably appraise at. Now, that is only as good as the data that is inputted so you don't want to go to the bank on that but, as I say, its more info for you.
Sorry for the long post. Good luck. I feel your pain.
> > A party has put earnest $ down on our house and has countered
> > with a lower price on the house than we want to accept. ...
> > appraiser may not appraise the house at our asking price.
> > Any suggestions?
Don't get anothr appraisal. Your prospective buyer doesn't care
what it's appraised for. They already told you want they are willing
to pay. You may choose to wait for another buyer.
Then Informer tells the forum:
> If the deal does not move forward you get to keep the earnest money.
No she doesn't get to keep it.
Compare recent sales in your area. Price per square foot for similar
sized and configured homes of the same age will fall in a range.
If you are near the top, you are too expensive.
"An earnest payment (sometimes called earnest money or simply Earnest, or alternatively a Good-faith deposit) is a deposit towards the purchase of real estate made by a buyer to demonstrate that he/she is serious (earnest) about wanting to complete the purchase. When a buyer makes an offer to buy residential real estate, he/she generally signs a contract and pays a sum acceptable to the seller by way of earnest money. The amount varies enormously, depending upon local custom and the state of the local market at the time of contract negotiations.
In very lively markets (as experienced on the East and West coasts of the US between 2000 and 2005) earnest money deposits could be as high as 5% of the sales price or more. In other communities as little as $500 or $1000 is acceptable.
If the seller accepts the offer, the earnest money is held in escrow by the real estate broker or settlement or Title company until closing and is then applied to the buyer's portion of the remaining costs. If the offer is rejected, the earnest money is usually returned, since no binding contract has been entered into. If the buyer retracts the offer, the earnest is forfeited. Therefore, it is generally in the seller's best interest to see as high an earnest money deposit as possible."
Well, two days later, this statement will probably be seen as a moot point. Or not, maybe you are still in negotiation. The appraiser is not the important factor here. Timing and motivation are the important factors. The appraiser's job will be to justify the sales price of the house for the lender. A higher sales price just means that the appraiser has to work a little harder.
As a seller, what do you stand to lose if you sell at this price? $$...and what else? Now, what do you stand to lose if you counter (besides the buyer)? Will you have to make double payments, or lose earnest money on another home? Will you have to accept a similar $$ offer or less in another month or two...if you get another offer?
Right now, on average, there are 6 homes listed for every buyer. This buyer chose your house to make an offer on. The offer price reflects one or more of the following:
1. Your house is overpriced according to your buyer Realtor's CMA.
2. Your buyer is concerned that future home prices will continue to decline.
3. Your buyer wants your house enough to make an offer.
4. Your buyer wants a great deal on a house and he thinks you will give him one.
You, the seller, know if your house is priced on the high end that you must expect low-price offers. Actually, you should expect NO offers until you reduce the price to market levels. Which means that your buyer agreed to look at your house knowing that it was priced high. Obviously, your house was top on the list or you wouldn't have the offer. The buyer sat and went through a CMA on your house and then sat through 12 pages of RANM forms, and possibly 9 pages of seller's disclosures to write the offer.
If you are a serious seller, you will review an updated CMA, in order for you to get a true picture of the recent selling prices in your area. Then you can accept the offer or counter at a sales price that reflects the current market.
Quote from Kelly Bee:
"The appraiser's job will be to justify the sales price of the house for the lender. A higher sales price just means that the appraiser has to work a little harder."
An appraisers job is to determine an opinion of value as to what a reasonable person is willing to pay and and a reasonable person is willing to accept at a given point in time. A higher price doesn't necessarily mean the appraiser has to work harder, it may mean the buyer will need more upfront money if value doesn't match sales price. (all things remaining equal)
Our job as appraisers is to determine an opinion of value, not set it.
A popular saying is, "it is what it is".
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Just to clear things up...
