A (Not-so) Sneaky Trick to Get Price Reductions
Posted May 16, 2008 @ 9:00 pm, Viewed by 256 Visitors, Read 267 Times.One of the great things about being a discount Realtor is that I deal with many clients who have had bad experiences with full-service agents. I've heard some pretty awful stories, as I'm sure both full-service and discount agents can attest. That is the nature of being in an industry with very low barriers to entry. But I digress. Here is another one, to be filed under "Ignorance, Unethicalness, or just plain Lying."
At a recent listing appointment, the seller asked me whom he could use to have his home appraised. This made me curious, as it is usually the buyer...or more specifically the buyer's lender that requires the appraisal, not the seller. I asked why he wanted to have an appraisal done -- did he have an offer already?
My client replied that he did not have an offer yet, but a previous real estate agent with whom he had worked told him that it was "illegal to sell a home for more than the appraised value."
Naturally, my client wanted to stay within the bounds of the law, so he was planning to have his home appraised prior to the listing being activated.
I told my client that I was not aware of such a law. As far as I know, it is legal to buy a house for whatever price the seller and buyer agree to. There are a few reasons I can think of off the top of my head why a buyer may pay more than the appraised value, such as:
- Fell in love with the house / had to have it
- Bidding war
- Speculation/investment
- Intangible value (maybe someone famous lived in it previously)
Now with that said, it may be difficult to obtain a loan for a house if the purchase price is above the appraised value. Banks will likely still loan money, but the buyer may need to make up the difference with cash.
I told my client why I thought his previous agent said it was "illegal to sell a home for more than the appraised value:" Because the agent wanted the seller to lower the price for a quick sale and thus, a quick commission. Perhaps the agent was ignorant, perhaps the agent was manipulative...but either way it helps keep my work interesting when I stumble across gems like this!
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quote: "4 or more agents over a 2 year period" I have a (former) client like that too. He wants to re-list with me but I refuse to return his calls; he's just a magnet for lawsuits. Perhaps he is related to your guy who turned down $725k?!
Of course I don't pretend to know the laws in all states, but I can't imagine that could be a law in any state. I lived in Las Vegas during the boom years not too long ago, although it seems longer. Anyway there was a time that more homes sold for over asking price and appraised value than sold under. So if the buyer was getting a loan they had to pay the difference between the appraised value and the price they agreed to pay. Wow that does seem like a long time ago, things sure have changed.
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That's a new one on me! "Illegal", huh? Although I know there are inexperienced and shady agents out there, I'm wondering if there was a misunderstanding. Either way, some sellers do need to hear it from a certified appraiser in this market. I'm seeing listings that are priced within market value, some on the low end, and they're still sitting. I walked away from a listing a while back where the seller got a certified appraisal done (after being listed with 4 or more agents over a 2 year period) at $700,000. He wanted me to list it no lower than $750,000. He had turned down a buyer at $725,000! In fact, he was so angry at the appraiser that he stopped payment on the check! I guess that's not a good example as he just wouldn't listen to anyone.