We got the The Hat Trick House appraisal back this evening, and I’m happy to report that it came back above the purchase price…
This is especially good news considering the issues we’ve had the past few weeks with appraisals in this neighborhood. Here’s a quick recap…
The Red Garage House (which is in the same subdivision as this one) was listed at $109,900 and was under contract for $109,000. It received an appraisal of $94K, which forced us to drop that contract (we couldn’t make enough money at that price). While we knew that appraisal was low, we couldn’t be confident that we’d be able to get a much higher one should we put it under contract again, so we were somewhat stuck and had to lower the asking price.
If it goes through, the sale price of The Hat Trick House will be $113,500. We won’t net anywhere near that much, as we’re paying $21,000 in closing costs for the buyer (that’s the way the buyer’s loan program requires it to be done), but the sale price will still show up as $113,500 in the MLS. This means that we now have a very good comp for The Red Garage House, and it should be able to appraise high enough that we can raise the price again.
We are scheduled to close next Friday, and hopefully there won’t be any roadblocks between now and then…
Nothing like setting your own market 🙂
Good work J Scott
Scott, great news. We’ve been hearing tons of horror stories across TX and CA about appraisals coming in low and forcing sellers to go back to the negotiation table. Its the new HVCC guidelines for Freddie and Fannie that took affect this summer. There is a bill in congress right now designed to overturn this. The apprasers dont know your contract price, usually are unfamiliar with the area, get drawn from a management company and sometimes dont even have access to local MLS to run comps. More often thnan not they areb also using beater REO’s to compare to your rehab. I’ve heard the best way to hedge against this is to meet the appraiser at your property and have all your comps laid out. Congrats again, both Hat trick Houses are gone now, each respectively setting their own high sales comps from which we both plan to use! Pretty cool : ).
Thanks Tom! Yeah, the inclusion of foreclosures as comps is what’s really killing us here…
My strategy for dealing with appraisers (which has worked except for that one horrible comp on The Red Garage House) has been to always meet the appraiser at the property with comps in hand, as well as with a full list of the renovations completed and some before and after pictures of the property.
Like I said, it usually works, but obviously not always…