Welcome to the first edition (of many I hope) of #AskTPREG (ask The Phoenix Real Estate Guys). What we will do is take your questions and answer them. You can email us, tweet us, leave a question on Instagram, in the comments below or on our Facebook page and we will give your our words of wisdom… or something like that.
We may answer in a video, we may answer on Periscope, we may answer with a picture, or we may not answer at all. That’s the great thing about being able to pick the questions.
Just make sure you use the tag #asktpreg.
Our first question actually came from a client of mine who is in the process of selling their home. We put it on the market for what we both knew market value was. With some of the systems we use to get traffic through the door, we were able to generate multiple offers including the one we accepted which was 8% over our list price.
My client at first thought we may have underpriced the house. When I told him to not spend the money before it comes in, because while I hoped it would, I doubted it would ever appraise for that value, he wondered why. As he said, we have multiple offers over list price and if someone is willing to pay that, why can’t they?
Well they can, if they are paying cash for the house. But in this situation, with a finance offer, we needed the value to come in. I was going to do everything I could to let the appraiser know why I thought the house was worth our offer price, but if the value did not come in we may need to do some renegotiations.
Sure enough, the appraisal price came in less than 1% of our original list price. The good news is my client still got more than they had originally said they wanted, we were under contract after just 24 hours of showings, and they could plan their move.
So why won’t the bank loan more if there are people willing to pay it?
Do you remember 2005-2006? That is why. A bank does not want to loan more money than the house is worth because what if the buyer decides not to pay their loan. Then the bank is left with a house which they paid for, that is not worth what they paid for it. The appraisal process is in place to protect both the buyer and the bank.