Nobody’s perfect, especially when it comes to pricing properties in today’s still-unsettled market.
That’s a lesson I and my sellers were reminded of when a recent sale in Mountain View came to a screeching halt because of a low appraisal. The property was townhouse near downtown Mountain View listed for $725,000 in an area in which a similar, bank-owned unit had recently sold for $660,000. When I met with the sellers, I suggested a price of $675,000 based on my analysis of recent sales, including the bank-owned unit. The sellers wanted to list their home with me, but the other two agents they’d interviewed had suggested much higher asking prices than I had. I was reluctant to take the listing at $725,000, but I agreed to give it a try.
All was going well. The photos and marketing were so strong that prospective buyers were calling off the Internet to see our “model” unit”, and the sellers received an offer for $715,000. But the smooth sale hit rocky waters when the property wouldn’t appraise for the $715,000 contract price. The buyer walked.
With the market in flux, appraisers are strictly adhering to recent sales, and the most recent sale in the downtown Mountain View area was of the bank-owned property for $660,000. That brought down the value of all the neighboring units. The sellers worked with me to come up with a new pricing strategy relisting the property at $680,000 and the sellers got three offers, eventually accepting one at their full $680,000 price.
I take some responsibility for the choppy ride during that sale. Every agent is having a hard time determining the right sales price to recommend to sellers, and I’m no different. I simply made a mistake in allowing myself to be persuaded to list this Mountain View townhouse at the higher price when I had comparable sales that pointed to a lower price. I didn’t help my clients or myself with that decision.
There’s a lesson in this saga for sellers, too. Look at the hard facts—including comparable sales—your agent presents. Remember that appraisers are scrutinizing sales closely, and they’re not budging from recent sales. So if your agent shows you recent comparable sales that don’t support the price at which you’d like to list your property, consider rethinking your price. Or be prepared if a transaction capsizes.
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