I just got off the phone with a client. Dude told me that his loan officer told him the house he is buying appraised for $5000 more than he is paying for it. Didn’t even surprise me. See, I make it a habit of not letting me people pay too much for a house. I have never had a house not appraise for at least the contract amount, even a few years ago when it seemed every realtor was having that problem.
I once got a client a house that appraised for $80,000 MORE than the contract amount. A couple of years ago, a client bought a house in Beaumont Reserve for almost $40,000 under the appraisal. How do I do it? I just understand how market value works. See, when I have somebody ready to write on offer on a house, I always go to my computer and study the recent sales in the area. I don’t just do the easy things like figure out an average cost per square foot. I study the floor plans of the houses, look at the seller’s disclosures to see how old the roof and HVAC are, the lot characteristics, see what kind of flooring and finishes each one has…..and on and on, and on some more. Heck, a lot of the time I’ve even be inside the sold comps! I also like to use more than 3 comps. The more you have, the more solid whatever number I come up with will be. It’s like a science and gut thing that work really well together.
The closest I ever came to having a house not appraise was last summer. The appraisal came in a couple thousand under the contract amount. I was the worst combination of heart-broken and embarrassed I have ever been. I mean, I really take a lot of pride in my ability to know market value. Once I actually saw the appraisal, turns out the appraiser had forgotten to include a detached garage that was on the property! Once the value of the garage was added in, the house appraised for just over the contract amount and I got to keep my good record in tact.
So, my dude is happy with the price he paid on his house, and that is what it is all about.