REALTORS® and Agents are professionals who are trained to sell homes and understand what buyers want in a home and community. Sellers usually do not have such training and understanding, nor the data sources from which they can research information in order to have logical or realistic opinions about the true value of their home and/or what it will take to sell their home. Agents often engage a local Baton Rouge Home Appraiser, as a non-biased third party, to help in the listing process to facilitate a greater understanding for the seller.

1.) Seller’s unrealist list price due to faulty internet research
2.) Over Improvement
3.) Accurate Home Measurement
4.) Complexity
5.) Rural or Lack of Comparable Sales
6.) A Poorly Constructed Addition or Enclosure Without Proper Building Permits
7.) Over-Built
8.) Odd Design or Odd Floor Plan
9.) Cosmetically Dated Interiors
10.) Strong Pet Odor
11.) Major repairs, construction issues, or safety issues which may prevent lenders from approving buyer’s loan

 

1.) Seller’s unrealistic listing price due to faulty internet research

Sellers often rely on internet sites that proport to give them their home’s value. When in fact, the numbers are just averages of homes sold in their area – averages of sales, often of a wide variety of homes. If the seller’s home is smaller or larger than average, unique, or has custom features, the home’s value may in fact, be a good deal be higher or lower. An Appraiser is trained and state licensed, and some, even FHA approved, as is Bill Cobb. The Appraiser is educated to know how to choose the most credible comparables and adjustments to the home’s value for a more reliable listing price. Therefore, the Appraiser is able to mitigate the seller’s unrealistic view of their home and help the agent and the buyer move forward with a more reliable list price rather than the home possibly sitting on the market for months or even years, or perhaps the undersale the home for thousands of dollars because they listed at the price than buyer originally insisted on because he thought he knew the correct price due to the confusing numbers produced by the internet.

2.) Over-Improvement

Examples: the homeowner A, now the seller, who installed $15,000 in slab granite slab granite in Kitchen and Bathrooms when it’s not all at common for homes to have slab granite in that subdivision; the seller B, who installed a $20,000 new Kitchen in a subdivision where the average home has spec home lower quality Kitchens. In the both sellers’ opinion, they can not see the over-improvement and think they’ve added $15,000 or $20,000 to the value of their home.

3.) Accurate Home Measurement

Agents are sales professionals, sharply dressed, and need to be available at all times to meet and present a professional appearance. So it is sometimes not to their advantage to climb through shrubs, trees, thorn bushes or to measure the more difficult homes such as 1.5 to 2 story homes, homes with extra angles, and homes with additions which present home measuring challenges. Some Agents would prefer to have an Appraiser professionally measure a home. Appraisers go out to every appraisal inspection to measure a home and are dressed and equipped accordingly, they do not have the possibility of having to leave and show a home to potential buyers who expect professional sales attire.

4.) Complexity

Sometimes Agents are asked to list homes with complex characteristics, such as:

A.) Outdated or unpopular design of a home
B.) A much larger than average and valuable lot
C.) Out-of-balance situation of a much higher priced lot than the home, such as a $200,000 property where the lot contributes $150,000 and the older or outdated home only contributes $50,000
D.) A home fronting a busy street, boulevard or road where the situation isn’t necessarily positive to value and/or making it more difficult to estimate value.
E.) A home located on a lot in transition from residential to commercial or retail uses, where a home can hold some commercial appeal. In Baton Rouge, that might mean a home fronting on Acadian Thruway, Siegen Lane, Staring Lane, etc..

5.) Rural or Lack of Comparable Sales

In areas outside of town, where homes are not in restricted subdivisions or cities and sales are more likely to be spread out further and more unique to each other, it is more difficult to find homes within the range required that are comparable. In a stable market where residents are happy to live there and rarely sell, sometimes there’s just a lack of sellers and
therefore, lack of comparable or competing sales making it more difficult for the Agent to estimate the listing price of a home.

6.) A Poorly Constructed Addition or Enclosure Without Proper Building Permits

Some TV shows, especially some realty shows, haves inflicted some serious damage to the American homeowner understanding of how real estate is supposed to work. It’s more common than you’d believe where homeowners decide to pull a DIY (do it yourself) addition and/or enclosure. One example would be to enclose a carport while not raising slab, not replacing wood ceiling with drywall, not upgrading central unit but just adding a window unit, installing indoor/outdoor carpet and the quality of construction not matching the home itself – all of which could determine that the addition is not additional “living area”. AND, some homeowners do these DIY projects, perhaps correctly, but do them without the proper building permits. Lenders instruct Appraisers to verify building permits and if no building permit was obtained, then they can not to count that area as living area. So just because a seller considers their new addition or enclosure as “living area” does not mean that it is. There are very specific standards an Appraiser adheres to when classifying an area as “living area” or not – it really is not an opinion than an Appraiser or Agent has or how nice an area is but how that area MEETS the STANDARDS that classify the area as “living area” by ANSI (American National Standards Insitute).

7.) Over Built

After over 23 years of appraising homes, Bill Cobb has witnessed hundreds of homes where adding an addition and/or an enclosure made no sense for the subdivision. For example, homes in XYZ Subdivision where homes range from 1,400sf to 1,600sf and the home to be sold has 2,300sf, 700sf larger than what’s normal. That does not make the home easier to market, but often, more difficult.

8.) Odd Design or Odd Floor Plan

Bill Cobb, Appraiser is currently working on a Pre-Listing appraisal with a New Orleans style luxury garden home that’s been on the market for over 700 days. The Master Bedroom is on the second floor, which is a major reason this home isn’t selling – the seller does not realize this lack of demand lowers the list price and has been trying to market the home at too high a list price. Another example, in Baton Rouge, is contemporary home designs – they are not as popular and take longer on the market to sell. Log cabin homes are the same – they take much longer to sell. It is nice to have a unique home or floor plan, but it often causes the home to be “odd” in the market which mean fewer buyers and fewer comparable sales.

9.) Cosmetically Dated Interiors

Severely dated homes present a challenge in estimating a home’s value. Real Estate Appraisers are equipped to deciphar how to make these value adjustments. Upon reviewing a professional Pre-Listing Appraisal, the seller can have a a better understanding of how the market reacts to out-dated listings.

10.) Strong Pet Odor

Homeowners adjust to pet odors over time and do not sense how offensive their pet odors have become. This is a home value issue! Bill Cobb is working on a Pre-Listing assignment in North Ascension Parish where a home has been listed, isn’t selling, and no buyers are interested. Why? Answer: 5 cats, a full litter box, 1 dog and their daughter is raising ducks in garage. The home reeks of urine and feces. The smell is very difficult to rid and often requires flooring to be removed and even the cement underneath to be treated in order to elminate the odors. The seller seems to have no idea that this affects the value and re-sell of their home.

11.) Major repairs, construction issues, or safety issues which may prevent lenders from approving buyer’s loan

FHA and HUD lend to many buyers and have much more restrictive guidelines on the homes for which they lend then conventional loans. However, recently conventional home loans have become more restrictive. In some instances, the buyer may not realize that the condition of their home will warrent repairs, sometimes even extensive repairs, in order to sell their home. Investors who have cash and buy a home and than make repairs after the purchase are nice, but the average home buyer must be pre-qualified financially for the loan and well as the home itself must meet the qualifications to qualify for a loan. Upon doing a Pre-Listing appraisal, the seller will be informed in advance as to what repairs must be made to meet specific lending criteria, conseqently, the findings are known up front and not after a contract has been signed and then the sale fall through. This is a waste of time to the Agent and a huge disappointment to both the seller and buyer who have also wasted their time. Or to make it work, the seller must scramble to make repairs and spend unexpected money in a very short time to honor the contract’s time frame and save the sale. Very stressful for all parties involved!

An Agent understands that all the factors mentioned above may confuse and frustrate a buyer, especially if the Agent needs to encourage them to sell at a listing price different than the seller expects – perhaps a list price the seller appears to feel confident is correct, but the Agent believes otherwise.

The opportunity to do a Pre-Listing appraisal allows the Appraiser, to come in as a third party who is neither benefited nor harmed by a list price, to perform the appraisal and provide thorough evidence and explanation to the seller as to why the home should be listed at a certain price. The helps keep in tact the professional relationship of the Agent and the seller – the Appraiser is the one who bares the brunt of bringing reality to the seller.