Some advice for sellers in an aggressive market

Dear Sellers,

The market feels aggressive out there and you’re probably going to get multiple offers, but let’s have some real talk. Last week I wrote an open letter to buyers, but today I want to share some perspective to help your end of the transaction. Whether you are in Sacramento or elsewhere, I hope this is useful. Any thoughts?

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Advice for sellers in an aggressive market:

1) Don’t get high on the headlines: It’s easy to read articles that say “the market is hot” and then ignore data in the neighborhood. It’s as if we see something in print and price according to the headline instead of actual sales and listings. Right now there are no shortage of articles saying “Sacramento is one of the hottest markets in the nation”, so be careful about getting distracted by the headlines.

2) Don’t aim for the unicorn: It’s easy to price for that one magical unicorn buyer who is going to pay more than anyone else for some reason, but I would advise you to price based on recent similar sales and similar listings that are actually getting into contract. I find some sellers say things like, “A cash investor from San Francisco is going to swoop in and pay top dollar for my property.” Yeah, maybe. But what might also happen is you sit on the market instead of sell because you priced for a mythical buyer instead of a real one.

3) Be careful to not treat the contract price as holy: We like to think there is something holy about a contract price as if price negotiation is finished when a contract is written, but that’s simply not true. If a buyer finds repairs are needed or if an appraisal rightly comes in lower than an inflated contract price, it may be prudent to reduce the price.

4) Remember the difference between “comps” and sales: We like to think all sales are “comps”, but there is a difference between properties that are actually comparable and ones that are simply sales. It’s easy to get distracted by a few high sales in the neighborhood, but if they are nothing like your property, then don’t give them much weight and pay the most attention to homes that are actually similar to yours. In simple terms, if your home was an apple, what have other apples sold for in the neighborhood? Don’t price your apple according to orange or banana sales.

5) Be aware of appraisals being scrutinized: If you haven’t sold a home in years, know the lending world has changed from what it used to be over ten years ago. These days lenders scrutinize appraisals like never before, so be careful about accepting an offer that is incredibly high if there is no way it is going to appraise that high. Of course if the buyer has cash to make up the difference, then you are fine. But if the buyer is strapped for cash, then the highest offer probably isn’t your best option. This is why many agents tell sellers to look for the strongest offer instead of the highest one.

6) Don’t hijack price per sq ft: One of the biggest pricing mistakes sellers make is to take a per sq ft figure from another sale down the street and use that figure to price their property. Here’s the thing though. There isn’t just one price per sq ft figure that applies to every single property in a neighborhood. For example, in East Sacramento the price per sq ft range for all sales last year was $169 to $552. So when a seller says, “Let’s use $552 to price my property,” my question would be, why not $551? Or why not $525? What about $436? Or maybe $278? We can quickly get a price that is far from reasonable if we are only looking at price per sq ft. Keep in mind smaller homes tend to have a much higher price per sq ft too (which I explain with my Starbucks cup analogy). My advice is to pay attention to price per sq ft, but don’t forget to look at actual similar sales in the neighborhood.

east sacramento price per sq ft range - sacramento appraisal blog

7) Try to be objective about your house: Buyers are going to look at your home with a microscope, which means they’ll see the wonderful things as well as the faults. Remember, it’s easy to get sentimental about your property because you have a history there, but memories can also be a mask for not seeing flaws. A seller recently told me, “My house is the most well-built one on the block” (the same builder built the entire tract). Another seller said, “My house is really unique for the neighborhood, which is why it’s worth so much more” (it was totally outdated though). Agents are trying to tell these sellers to price lower because that’s where the market is, but both these homes are likely going to be overpriced because the sellers cannot get past their own subjective views.

8) Be FHA-ready: One in four homes in Sacramento county sold with an FHA loan last year, so it’s a good idea to have your home ready for an FHA appraiser if you think your home might go FHA. Your agent can most likely bring you up to speed on some repairs that might be required or maybe look over an FHA list. Keep in mind 34% of all homes under $300,000 went FHA in 2016 in Sacramento County and the current FHA loan limit is $474,950. This is also a reminder that financed offers are closing escrow and actually far outweighing cash transactions.

9) The market isn’t the same at every price range: We like to think the market is doing the same thing in every price range and neighborhood, but that’s not true. For instance, the market under $300,000 is more aggressive than the market above $1.5M. Thus the market could be “hot” in one price range or neighborhood and cool in another. This is important to remember because all day long we read about how hot the market is in Midtown and how rents are rising there, but that same dynamic might not be present in your neighborhood.

10) Listen to your agent: In a market that feels aggressive it’s easy to ignore pricing advice from agents, so some sellers price at completely unrealistic levels. Despite values showing upward pressure in many price ranges, we are not in a market where you can command whatever price you want (even with anemic inventory). So if your agent is telling you where the market is and showing you similar sales and listings, ask yourself why you are not listening.

I hope this was helpful.



Questions: What piece of advice resonates with you? What is #11? Did I miss something? I’d love to hear your take.

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Why do appraisers take so long to finish the report?

You had an appraiser come out to your property last week and the appraisal is still not complete. It’s been 10 days!! What is going on? Here are some reasons why the appraisal might be taking so long.

appraisal inspections sacramento area

  1. Liability: Appraisers have to support the value in the appraisal report and be liable for that value, so appraisers should take their time to finish a job right (within a reasonable time frame of course).
  2. Juggling Work: Keep in mind appraisers are likely juggling many different appraisals at any given moment. This means all files in an appraiser’s briefcase are probably not being worked on every single day. If an appraiser only had your house to appraise, it would be easier to finish the appraisal sooner.
  3. Complex Assignment: If your property is complex, it may take longer to finish the appraisal since there is simply less data available for comparison. Most of my lender clients want appraisals back in 7 calendar days, which is usually very doable. However, when a property is out-of-the-ordinary for some reason, it’s nice to have more time. Sometimes upon inspection the appraiser will find out the property is much more challenging, so that can warrant a need to renegotiate the due date. I find most private party clients for divorce or “Date of Death” do not operate on the same time table as lenders since it is much more common to have easily 2-3 times as long to complete assignments.
  4. Extra Days with the AMC: Appraisals for lenders are often ordered by AMCs (Appraisal Management Companies). The appraiser might have completed the appraisal in a timely manner, but it could have sat in the hands of an AMC’s processor for an extra day or two on the front end and then an additional day or two on the back end as the appraisal goes through the AMCs quality control before the report is actually sent to the loan officer.
  5. Client Timeline: If the appraisal was ordered from the lender, find out what the actual timeline was that the lender gave the appraiser. After all, the lender may have given the appraiser 14 days. If a client gives an appraiser a long leash, the appraiser is likely going to enjoy the luxury of more time.
  6. Busy Schedule: If an appraiser is incredibly busy, that may unfortunately push back deadlines. That’s never ideal, but it happens in every industry.
  7. Lack of Professionalism: There are of course examples where an appraiser simply mishandles time or an appraisal, which can cost a client money. There is no excuse for that.

Advice for hiring a real estate appraiser:

  • Ask the appraiser when the report can be in your hands (before you hire the appraiser). Be sure you are on the same page about deadlines.
  • Let the appraiser know when you specifically need the report.
  • Have realistic expectations about time.
  • Get something in writing about when the report will be completed. The appraiser likely has an order form that you can fill out (get a copy of the order). Or you can always talk via email back and forth and use that conversation as your agreement.
  • If you need something right away, you might want to offer to pay a “rush” fee.
  • Be leery of “fast and cheap” appraisal marketing. If you have a delicate situation and you do have the luxury of time on your side, find an appraiser who will take more than 24 hours to appraise your property.
  • Sometimes clients might say something like, “I know the report will be in my hands next week, but can I just get the value now?” The value ultimately comes at the end after all research has been completed.

I hope this was helpful.

Question: Do you have any stories to share or any questions? Let me know.

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Top items to review in an appraisal report: Part 3

What was the appraiser thinking? That’s not always easy to tell since an appraisal report can often be more than 25 pages in length. Where do you even begin to understand the rationale of the appraised value?

formsOver the past couple weeks I’ve shown you some of the big-ticket items to look for in an appraisal report (see Part 1 and Part 2). Today I wanted to wrap up this series by providing an example of an appraisal report that includes the information from the previous posts as well as a few extra tidbits. This example has sections highlighted in bold blue text to help you get straight to some of the most important items to review. This is perfect for home owners, attorneys and anyone in the real estate community wanting to brush up on the art of reading an appraisal. Ultimately, knowing these things may help you gauge whether the report is reliable or not (as well as give you a framework for challenging a bad appraisal).

CLICK HERE TO DOWNLOAD the example report. I’ve highlighted about ten sections in blue and included descriptions for ease of use. I’m also glad to visit your office to lead discussion to talk through this document (it would take 10-15 min).

example appraisal report - by sacramento appraisal blog

Please note each appraisal software company may have a slightly different layout, and that appraisals for non-lending purposes may look even less similar.

Any questions or stories to share? Comment below.

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Messy, Nasty and Cleaning before the appraisal

I get this question all the time. Should you clean up before the appraiser comes? In short, it’s okay if things are a bit untidy, but there is a big difference between messy and nasty. Let me explain what I mean.

dirty dishesMessy: This is when some things that are not perfectly tidy. The kids played with Legos last night and their creations are still on the floor. The dishes didn’t get done after dinner. Laundry is piled to the ceiling. It’s been a hard week and your house shows it. Sometimes home owners will say, “I can’t have you come over with a dirty house,” which is understandable, but I commonly say, “The inspection should be fairly brief. It’s okay if everything is not perfectly tidy. Life is full. It’s really no problem at all because I’m paid to look past a normal mess.” In short, if there is evidence of regular living, that type of clutter is no big deal. Appraisers are by nature supposed to be objective, and we can see beyond roller skates on the floor, dirty dishes and a lawn that needed mowing last week.

Nasty: On the other hand, if your house is severely cluttered or thrashed, has terrible odors and things like animal feces on the carpet, that’s another story. That’s what we in the industry call “Nas-tay”. If it’s this bad and bordering on a hoarder property, the appraiser may just have to inspect the property as it is because it’s probably unrealistic to get it cleaned up in a timely manner. I’m not a psychologist, but my heart does go out to people in these situations because there are always deeper reasons for such a mess. However, from a property value perspective, it’s not a good thing. In short, if you have a sincerely unclean situation on your hands and it’s reasonable to cure, take a weekend (or longer) to get things looking and smelling decent again. This will help improve your property value.

I asked some friends on Twitter a few days ago for some examples of “unclean” pictures for this post, and I was given a few gems thanks to Realtor Erin Stumpf Attardi, Appraiser Gabe Trevizo and other friends.

photo from Gabe - Arizona Appraiser

Photo of messy house by Realtor Erin Stumpf Attardi

Dirty kitchen - photo from

Closing Thoughts: Appraisers are paid to be objective, yet first impressions are still important. Just as “neat and tidy” is better for prospective buyers, it’s better for appraisers too (though appraisers should be understanding about a normal mess). In short, if you have time to spruce things up and even light some candles (not for romance), go for it. If life is full and you have a minor mess on your hands though, don’t worry about it.

Owner: “My kid’s room is a disaster.”
Me: “I’m glad you’re not inspecting my house.”

Me: “Can you open up the garage for me?”
Owner: “You’re not going to be able to get in. It’s a disaster.”
Me: “Garages are supposed to be messy.”

Owner: “I’m sorry it’s such a mess” (when it’s actually pretty clean)
Me: “Believe me, I’ve seen a mess, and this is NOT a mess.”

I hope this was helpful. If you’re preparing for an appraisal inspection, you may also be interested to read “10 things NOT to do when the appraiser comes over” and “What should you do before the appraiser comes?

Any questions or stories to share? Feel free to comment below.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook