Sellers, did you know that you actually have to sell your home twice? WHAT you say? No, seriously. You have to find a willing buyer, willing to pay the price that you set for your home. But then, and even more importantly, you have to sell that same house to the appraiser who is giving the lender the value of the home for the purposes of how much the bank could get for it in the event that the buyer defaults. That is why, if you list your home with a responsible, professional real estate adviser, he or she may tell you that you are asking too much. It is all well and good to get a great price, but in the end, you also have to convince the appraiser that your home is worth that price. This is an extremely important part of the marketing of your home, especially in the current market setting of Austin. We are still seeing multiple offers coming in, and often, a house will sell for a price above the listing price. But that does not mean that you are done!! You still have to sell the appraiser that the real estate and home is actually worth that cost. If they say it is not, then you are more or less back to the negotiation table with your buyer. Obviously, you would like the buyer to come up with the extra cash out of pocket and pay the difference. The bank will never lend them the difference, so they will have to pay that out of their own money. So let me ask you. If I wanted to sell you a Twenty Dollar bill, but wanted to charge you twenty-five dollars for it, what would you do? You would look at me like I had horns growing out of my head and walk away. Okay, sure, there is a difference, because houses go up in value. But what you are asking buyer to do is to buy your house starting out in the negative, and HOPEFULLY the appreciation will take over and they will make back the difference. For small differences, that may be fine. But I have seen price and appraisal differences of tens of thousands of dollars. That would take a very long time to "catch up." You could split the difference with the buyer. That may help, or you can just lower your price to the appraised value. Although we have seen double digit appreciation in Austin in some areas, the average appreciation per year still ranges between 2 and 5 percent. Depending on the difference in the contract price and the appraisal, you could be asking the buyer to take a huge hit on the investment value of the home. Just something to think about when you are setting your price and when it comes time to look at the multiple offers. Do you really want to take that offer that is ten or twenty thousand dollars more than another offer, if it is financed? The appraiser may bring you back to earth really fast. Of course, a cash offer doesn't have to appraise, although some people paying cash will get an appraisal. You are not bound in any way by that appraisal. That is simply a case of buyer beware. (that is not to say that the buyer may not pull out when they find out the appraised value is lower than the contract price, if they have the right to do so under the terms of the contract--such as during the option period; a lesson for another day). Have a wonderful week! I have attached an article about this very topic below:
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