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Old 05-06-2008, 09:48 AM
 
7 posts, read 21,613 times
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We are in the market to purchase a new home after moving to a new city. Our realtor showed us a home that we are interested in. Our realtor also is the listing agent for the seller. We were concerned about the price, most $$ in the neighboorhood. Our realtor said that buyer would probably take less for the house since it has been on the market for 2 years. She suggested a price which was considerably less than listed price. The buyer said he will accept the offer. The bank's opinion is that it is overpriced, even with our offer. We ordered an appraisal of the house since the realtor keeps telling us that it is worth a lot more than we are offering and that we are getting a good deal. Appraisal came in at $5000 more than our offer. So are we still paying too much? Does that mean we will be buying the house for almost 100% of its value? We are confused, don't want to upset the seller with a ridiculous offer, but doesn't the appraisal give the true value of the house?
The appraised value came in at 25% less than the listed price.
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Old 05-06-2008, 10:07 AM
 
Location: Humboldt Park, Chicago
2,686 posts, read 6,824,954 times
Reputation: 1174
Default Get a new realtor

I would never use the same realtor who also lists the house if I were a novice single family home buyer.

You should not pay more than appraised value. I would take your offer off the table immediately and look to go 5-10% below the appraisal value. They will not be able to sell it in this market for more than appraised value unless the realtor is able to con someone else into buying it.

Your realtor is lying to you and should be fired immediately. The house is not worth more than the appraisal. It may be worth even less actually.
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Old 05-06-2008, 10:10 AM
 
Location: Hernando County, FL
8,489 posts, read 17,394,839 times
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Did you order the appraisal and did they know how much you were offering?

$5000 over what you are offering could be good on a $100,000 home but a drop in the bucket for a $2,000,000 home.

As far as the listed price, that shouldn't have any bearing on your offer.
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Old 05-06-2008, 10:11 AM
 
Location: Hernando County, FL
8,489 posts, read 17,394,839 times
Reputation: 5397
Quote:
Originally Posted by Humboldt1 View Post
I would never use the same realtor who also lists the house if I were a novice single family home buyer.

You should not pay more than appraised value. I would take your offer off the table immediately and look to go 5-10% below the appraisal value. They will not be able to sell it in this market for more than appraised value unless the realtor is able to con someone else into buying it.

Your realtor is lying to you and should be fired immediately. The house is not worth more than the appraisal. It may be worth even less actually.
The appraisal was $5000 more than the offer unless I was reading it wrong.

Also using the listing agent to purchase will not always hurt you, it can give a little more flexibility to the seller if the agent adjusts the commission.

But in this case I would tend to agree with Humboldt, look for a buyers agent to help you out. Although this may not be possible at this point since you have made an offer through the list agent.
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Old 05-06-2008, 11:06 AM
 
Location: Salem, OR
13,733 posts, read 31,514,627 times
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Yes there is a conflict of interest. You need to know that if you use a buyer agent now then you are creating a "procuring cause" problem for the buyer agent. You may have to pay them directly.

I personally think $5,000 less than appraised value is not a good deal, especially for a home that has been on the market for two years. Whether or not you are paying almost 100% of it's value depends on your price point.

The listing price is irrelevant. The agent grossly overpriced the home to begin with.
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Old 05-06-2008, 03:39 PM
 
7 posts, read 21,613 times
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The list price on the house is 805,000. We ordered the appraisal ourselves since the bank feels it is overpriced. The agent told us she was not going to charge the seller the full commission therefore the seller would be willing to accept a lower offer of 670,000. The appraisal came in at 675,000. The seller already feels like he is "giving" the house away, the realtor thinks 675,000 is a good price and we are getting a good deal. We like the house but do not want to get "stuck" if we sell in a couple of years. We like the realtor, she may be caught in the middle though since she knows the seller very well,I don't think it would be appropriate for us to change realtors, she is very well known and has spent a considerable amount of time with us. I also feel a little guilty that she isn't getting her full commission!
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Old 05-06-2008, 03:41 PM
 
Location: Dallas TX
14,265 posts, read 20,501,229 times
Reputation: 20114
I think it depends on the agent. Our agent was doing negotiations with us and a buyer. She did an amazing job not 'leaning' to one side or the other. Sadly it didn't work out, but my agent really impressed all side.
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Old 05-06-2008, 05:02 PM
 
Location: Albany, OR
540 posts, read 1,893,846 times
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Perhaps one of the appraisers who posts can weigh in on this, but it has been my experience that in today's market, many appraisers are tending toward more conservative valuations...and it would NOT (necessarily) be of signficant concern that the value came in just over the offer price.

I recently helped some people buy a new construction home (price was in the mid-high 200's) - and the appraisal came in at $1000 over the offer price. We had negotiated a pretty good deal (significantly below asking price and WITH A/C and fencing) - so the expectation might have been that an appraisal would have come in 5 or even 10K above...the houses list prices are comp'd pretty well with the local market. In a subsequent conversation with the lender - he said that he's been seeing very conservative appraisals - just above the contract price.

I can see the logic in this - but wonder what our appraiser population thinks?
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Old 05-06-2008, 05:10 PM
 
Location: Albany, OR
540 posts, read 1,893,846 times
Reputation: 356
On the subject of dual agency - in many states (including Oregon) - it is perfectly legal and ethical for an agent to represent both sides. Many good agents do it all the time - and many other good agents (like me) will NOT do it.

The bottom line is whether or not you TRUST the individual to fairly represent your interests...AND those of the other party. In your scenario above, I would question whether or not your agent was adequately representing his seller by telling you "they'd take less..." Unless s/he had specific permission to do so, (which they well may have) - they weren't acting in the best interests of the seller by disclosing that.

I agree with Silverfall that you may end up with a 'procuring cause' issue by changing agents at this point - BUT - you may be able to resolve this by talking to the agent about your concerns and allowing him/her refer you to another agent (YOU can pick the agent, but the original agent would do the referral paperwork - so they would get a referral fee - so it's not a complete loss AND you will have an agent working SOLELY for you).

If you trust her and are confident that she is doing a good job for you - that's ok too. But don't stay with her out of GUILT! This is business and you owe it to yourself to get what YOU are paying for - professional representation.

Just my 2 cents!
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Old 05-06-2008, 05:48 PM
 
Location: Salem, OR
13,733 posts, read 31,514,627 times
Reputation: 12105
Since you are in a luxury home price range, I am not surprised by the lower appraisal. Whether or not it's accurate, I don't know. There are some significant woes in the jumbo loan market, and so many of these homes are just sitting and sitting. I would expect many of the prices of these comes to come down in my area, not sure about where you are.

I would look at the comps. Is the $675,000 amount more in line with what the other homes in the neighborhood sold for. You had stated this home was the most expensive already. If $675,000 is still more or on the high end then talk with your agent about it.
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