I ran into an old friend and client the other day at a housewarming party. They’ve had to make some life adjustments due to health issues, and are wanting to sell their house, buy something smaller with a smaller payment, and do a lot more traveling and spending time with friends and family.
I had visited their house maybe a month ago, to see their progress on the updates and changes that are a continuous part of their home, and make recommendations that might help their home sell faster and for more money. The Mr. is always working on several home projects at once, and wanted some guidance as to what improvements and changes would really add value.
We also discussed potential pricing at that time, had the house measured to get an accurate size, and settled on a potential range for a list price.
So I run into him at a party the other day, and he proudly announces that he has refinanced, and the appraisal came in at an amount that was about $20k higher than the sale price we had discussed. His list price and net just made a huge jump in his mind.
When he finally sells that house for much less than his refi “appraised value,” it’s going to break his heart. He’s going to feel like he’s lost that money - although it was money he never had, never was going to get, money that never existed.
Oh, and he has a spectacular house. The workmanship is such high quality, the finishes, everything is just beautiful. Except the neighborhood, which is why he’s not going to get that extra $20k. And the number of competing, similar homes, in better areas - that’s why he’s not going to get that extra $20k. And the fact that you need a buyer AND a seller to determine market value, not an appraisal for a refi - that’s why he’s not going to get that extra $20k.
Lucky me, I get to have a long talk with him about that. I’m not looking forward to it.
I had a mini-rant about appraisers a couple weeks ago, but I promise, I’m not an appraiser-hater. I just keep running into the perception of appraisers as gods, as final authorities, especially with homeowners with appraisals in hand for which they aren’t even the intended user! (See? I learned some new lingo from the nice appraisers that commented.) The seller’s hopes are high, and now I have to dash them. Fun stuff.
