We'd like to think that the property we own is the best available on the market. We all believe that it is the most expensive. Your buyer even agrees with you and offers you a contract of sale - full price no less.
Just one small problem. The parties who matter most to this transaction have not spoken yet.
Your buyer's lender and/or appraiser.
Lenders and appraisers are becoming very cautious in this market, especially in condo sales. They are going as far as to order two appraisals on the same unit to insure the value is there. So what does this mean to you, the seller? Your closing plans, moving plans and everything you want to do pertaining to your sale is dead in the water if the appraised value falls short of the contract price. You basically have to start the negotiation process from scratch. Follow me on this.
Your condo is listed for $1,000,000 and you receive a full price offer. You're as happy as a pig in a poke. Your buyer is so good; with the contract he shows you a mortgage commitment letter from his bank. He is 100 percent approved, subject to satisfactory title and appraisal. OOPS!!
The appraisal is done for a value of only $950,000. As greedy as we all are, I don't think you are going to lower your price to $950,000. The buyer does not have the extra $50,000 to cover the appraisal shortfall. Better yet, why would he want to pay $1,000,000 for a property that appraised for $950,000?
Bottom line is you DON'T have a sale. The best advice I give to prospective sellers, especially in this type of sale environment is to spend the $400 and have your own appraisal done before you list the property for sale. In my mind it's the best investment you can make!
Next week we will discuss the past legislative session and how they helped Florida homeowners. I probably have a better chance of hitting the lotto.
Ric Cornelius is the Broker/Manager of Sand Key Realty Sales and Rentals, Inc. Sand Key Realty has three offices with 40 agents. One office is at 740 S. Gulfview Blvd., Clearwater Beach, 727-443-0032; the second office is at 2701 Gulf Blvd., Indian Rocks Beach, 727-595-5441; and the third office is at 309 Belleview Blvd., Belleair, 727-461-4200.
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