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ASK PHYLLIS!

Posted by on Aug 18th, 2011 and filed under Between Friends. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

Dear Phyllis,
I have interviewed three real estate agents regarding the sale of my mother’s home. Last October an appraiser valued the home at $1,400,000. The real estate agents I interviewed have suggested listing the home at: $995,000, $1,050,000 and $1,200,000. Why do you think there is such a discrepancy among them and why do you think all of them are so much lower than the appraisal?
KLJ

Phyllis Harb is a Realtor with Prudential California Realty. She may be contacted at (818) 790-7325 or by email AskPhyllis@Realtorharb.com.

Dear KLJ,
Without knowing more about your mother’s home, it is difficult to answer your question.

It is interesting that two of the Realtors were within $55,000 of each other’s value. Did the agent who suggested the $995,000 recommend that price expecting that you would sell in a multiple offer situation and hopefully bid the price over the $995,000? If so, this brings the $55,000 range closer together.

As far as the $1,200,000 value, I am seeing a trend of homes being overpriced and then after a period of time being reduced. Each of the agents you interviewed should have provided you with a detailed analysis including comparables. Review the comparables with each of the agents.

Your Realtor® will recommend a list price, you as the homeowner set the list price and the buyer determines the final selling price. An appraisal is an unbiased estimate of what a buyer might expect to pay – when both buyer and seller are informed parties. The appraiser often utilizes sales comparables which are as much as six months old (add a 45 day escrow to the six months and you realize how old these comparables can be).

In a softer market, such as what we are experiencing, I typically give more importance to active listings (your competition – what buyers will be comparing your home to) which I feel are more important. And then I also like to analyze the homes which are currently in escrow and how quickly they sold.

A Realtor’s market assessment is typically a more accurate reflection of today’s market, not last month’s. Simply because the appraiser is looking at sold comparables (some as old as six months).

When I complete a market assessment for a client, I am trying to determine today’s value based on today’s active listings and recent “in escrows.” Whether an appraisal or Realtor’s market assessment, the current competition must be given the closest scrutiny.

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