Real Estate Round-Up: The value of your home

It is an interesting time in real estate. Like everything else, it is in flux. Buyers seem to be cautiously reappearing. Sellers seem to be opening to the idea of showing their homes. When you add the general unrest over the protests and rioting across the nation, it's no wonder things are in flux.

Let's go back to basics. There are homes to sell and there are buyers who are buying, so let's talk strategy. I mentioned in my article two weeks ago that many of the buyers are standing in the wings. But when they walk down the path of homeownership, they are mentally believing that there will be some "deals" out there for them. Statewide, the pending sales show a slight dip in listed price, which would mean that prices are slipping, or are they?

Begin with the knowledge that everyone who is part of a transaction has a different opinion of the perceived value of the property. Sellers see their home like a "castle," worth not only what is the concrete value, but also the emotional value bundled up in it.

Buyers see the home with all its shortcomings and flaws. They see all the things they will have to do to the home to make it perfect for their needs.

Remember the movie, "The Money Pit?" Buyers look through that lens. There is one party in the transaction that has no emotional commitment to the transaction, and that is the appraiser. Appraisers work for the bank. Have you heard the phrase, "He who holds the gold rules?" Well, there is truth in this statement.

Appraisers are the guardian for the lender, making sure that they don't lend too much on a property. Appraisers are tasked with protecting the lender from the liability of foreclosure. Appraisers must find data that supports the value of the home as represented by the purchase price. Inventory is low, sales are lean and finding data is a challenge.

Completing the package of interested parties are the bank, the home inspector and the tax assessor, all who perceive value based on their perspective. The value is viewed differently by all the parties above.

What's a seller to do? If you get an offer on your home, remember it's a dance, not a knockdown. If a buyer puts pen to paper and submits an offer, they are legit. Put your emotions on the side, let your Realtor take the heat and help you with a strategy to bring the parties together. That is the key word: "together."

It is not a market where either party holds all the cards. If you want to sell your home, submit a reasonable counteroffer. Be willing to go back and forth, a few times. If you end up with a transaction that successfully closes escrow, do you really care if the dance was more a West Coast swing than a waltz?

If you're the buyer, remember that the offer you make presents not only a financial offer, but an opportunity to create a working relationship with the seller.

If the offer is too low, the seller will be insulted and may respond with a counteroffer that is more a response than a reply. You offer low; seller responds high. Remember, there is middle ground that will appeal to both parties; begin your offer closer to that number and the dance will be much smoother.

The appraiser is an island unto himself. A professional, experienced, knowledgeable Realtor will prepare a report of comparable properties for the appraiser that reflects the contractually agreed price.

Often, the "comps" need a little help, so additional information about the home and the parcel can add to the value of the home. Just remember, the appraiser works for the lender, so they must provide written proof of the value they determine for the property. They will not venture off the reservation for fear of receiving a negative "quality control" assessment on their appraisal.

Sellers or buyers can challenge an appraisal with a tool, called "Tidewater," but I have never seen it work. In the "Tidewater" scenario, the sellers or buyers' agents can submit additional comps that they believe reflect the true value of the property, with the hopes that the appraiser will rework the figures using those comps.

The appraisers will not adjust. If they did, then every previous appraisal they did could potentially come into question. Bottom line, the appraisal needs to come in at value the first time, or the buyer will need to switch lenders.

The home inspector has a unique perspective of value. They are hired to inspect the home for items that are defective, inoperable or unsafe. The inspection is a three to four hourlong process, depending on the size of the home and property.

In 23 years, I have never had a home that did not have at least a few items that fall into one of those categories. By nature, the negatives decrease the value of the home in the eyes of the buyer. Sellers can rectify that negative by agreeing to repair the mechanical and safety issues or offer the buyer a credit so they can do the repairs themselves.

The final two parties with a vested interest in the home are the bank and the tax assessor. Both parties accept the value of the property based on the report by third parties. The bank's value is derived from the appraisal; the tax assessor's value is derived from the closed sale price.

So, what's the fuss? The world is facing uncommon times. One way to navigate these times is to be flexible and keep your eye on the prize, which is to sell or buy your home. Giving up a little to finish the race is a small price to pay when you consider the years of enjoyment you receive. Remember the quantifiable value of a home is the amount that finds all the parties involved in the transaction on common ground. As always, we're here to help you improve your dancing technique, whether it's the West Coast swing or a waltz, as you flow through the process of selling or buying a home. Enjoy your week.

Kim Murphy can be reached at [email protected] or 760-415-9292 or at 130 N. Main Ave., in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.