Listing Price - Appraisal versus Realtor's Recommendation

novahomesickJune 9, 2009

My SIL is having problems determining a price for her home which is soon to be on the market. Here's the bare bones background.

My SIL is recently divorced. She and her kids moved out of the family home two years ago and left the ex-DH there. In this case, DH does not stand for Dear Husband.

Anyway, the divorce agreement calls for the house to be sold in AS IS condition with the pricing decision made with the ex-couple's joint agreement in consultation with a realtor. An appraisal was deliberately left out of the sales process outlined in the agreement.

Their realtor sells a lot in her area which was why she was chosen. She initially quoted a price around $650,000. Ex-DH feels it's worth a lot more because his appraiser friend gave him an "off-the-cuff" value of $849,000. The realtor now thinks the asking price should be around $730,000. Ex-DH won't go below $799,000 and is threatening to take my SIL to court if she won't agree to his price. Ex-DH believes that the house has an absolute value and the comps don't matter since the house is unique. His friend told him there are no comps for the property.

Ex-DH wants to formalize his appraiser friend's appraisal and wants my SIL to get her own appraisal. She'd rather stay out of court because she's supporting two kids with no child support from the Ex-DH and doesn't need the added expense. She has a call into her lawyer to discuss.

In her zip code, there are 8 months of inventory in the $700,000 price bracket and 10 months in the $800,000 price bracket. In the last 3 months, only three out of 180 sold homes have sold for over $700K in the zip code. The lower end of the market is brisk. We assess annually here at supposed FMV by law but FMV for assessment purposes is squishy. It's a 1964 colonial with a lovely two-story family room/master bedroom addition. However, the kitchen and baths haven't been touched since the house was built. The addition looks great but the main house is in sorry shape. The 2009 tax assessment is $580,000 which includes added footage from the addition.

I'm curious. So, what's the value of an appraiser's price versus a realtor's? This is not a lender's appraisal which a buyer will need but a pre-marketing appraisal. It is in everyone's best interest to get this house on and off the market but at a respectable price. I'm thinking the realtor is the expert in current market conditions. I'll be paying the appraisal bill if SIL goes that route. I've sold three houses without a pre-market appraisal. I think the notion of "absolute value" is crap and I'm concerned that pre-conceived notions my kill any deal once a buyer's bank appraisal is conducted. But I may be prejudiced since I'm footing the bill and I'd rather help their kids by paying for a summer camp.

Opinions?

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creek_side

The market value of anything is what a buyer and seller mutually agree upon, when neither is under any particular pressure to buy or sell. An appraiser is supposed to divine what that is ahead of time by reviewing the subject property and recent sales of similar items in the current marketplace.

There is no such thing as absolute value. An item can be worth no more that what someone is willing to pay for it. If there are no buyers at any price, then the item is worthless, at least in the current market.

I would suggest getting an appraisal. With that in hand, list the property slightly below appraisal. Then advertise the property as for sale below current appraisal. That should draw interest. The listing price will probably be more realistic than the appraisal anyway, since it won't take into account the divorce situation. Buyers are often loathe to make an offer in if there is a divorce involved, which can depress the price below what it would be otherwise.

    Bookmark   June 9, 2009 at 5:56PM
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rar1

First, there has not been an official appraisal.

Second, the court order does not allow it per your post.

Options are: get an appraisal and get a realtor that will accept it as basis for the listing price. Interview several realtors and get comps and a market analysis from each of them to determine how close the "off the cuff" appraisal is and then set the price.

It sounds like the guy is being a real jerk! Unfortunately, it may be back to court to have the Judge appoint a realtor and settle this mess. Ex DH sounds like the type that he will fight anything, no matter how wrong he is.

Good luck!

    Bookmark   June 9, 2009 at 6:10PM
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sue36

I would speak to more than one realtor to get a better feel for the market. It is in the realtor's best interest to price the house a little low...it will sell quicker and the difference in commission is small in comparison to the difference in value. $50k difference to your sister is only a $2.5k difference to the realtor (or half that if commission is split). In other words, I wouldn't take the realtor's word for it.

What is "unique" about a 1964 colonial in basically dumpy condition? Is it on a lake or something? Oil well in the backyard?

    Bookmark   June 9, 2009 at 8:16PM
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berniek

Get an independent appraisal, anything else, someone will be unhappy with the figures!!!

    Bookmark   June 9, 2009 at 8:46PM
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xamsx

Tell her to go back to court. She can have the judge find the Realtor, set a price at which it will sell, and have the kid's child support garnished from the ex's wages (and tell her to file with the state and feds to garnish any tax returns her ex may have coming and not to tell him she did it so he won't have the opportunity to adjust his W-2s). Have her attorney petition the court for her ex to pay her attorney fees since his unwillingness to abide by the original agreement is why they had to go back to court.

I imagine since she moved out with the kids and he stayed paying no support that this guy is a real winner. It is doubtful she will be able to successfully sell this house without a court order unless her ex finds reason when he sees the order to appear in court. Still, since they are almost $200K apart he may feel it is worthwhile to go to court... although lack of child support payments makes me think he'd be silly to go that far.

    Bookmark   June 10, 2009 at 12:24PM
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vhehn

whats the first thing the flippers on tv do when they get a flip done?

    Bookmark   June 10, 2009 at 1:00PM
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landmarker

The value and proving the value has nothign to do with the DH's motivation. By keeping price high he keeps living in the house and keeping money from her. Her attorney's advice seems terrible in that he agreed to a no child support settlement, agreed to allow DH to live in the house, and agreed to a pricing methodology that involves "joint agreement" on a divorced couple who hates each other. Furthermore, if your SIL goes to court and wins a judgement, there are still way too many ways that the DH can sabotage a prospective sale.

    Bookmark   June 10, 2009 at 1:42PM
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sweet_tea

Get an appraisal. They are usually around $350 or so. It is well worth it. The judgement does not forbid an appraisal top be used as a tool, it just isn't forcing one. The SIL could use an apraisal as a tool to help identify the market price and hopefully the realtor and the DH will view ita as well. Though there is nobody forcing them to set the price or agree with the appraisal.It surely cannot hurt to have it.

When I sold, I got an appraisal. It is money well spent. If you price too high, your house sits unsold or worse, it sits a long time and then someone lowballs and you accept for an amount that is less than what you could have gotten if you priced correctly.

Note the the DH could be correct, possibly the home is worth more. Why give away over $100k if the home is really worth more.

An appraisal will tell what is the all important question.

    Bookmark   June 11, 2009 at 3:22PM
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marys1000

Sounds like she needs to get a new lawyer and start over.

    Bookmark   June 11, 2009 at 7:34PM
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sweeby

If he honestly thinks it is worth more, why not ask him to buy her out at a price he considers low but she considers fair? There seems to be plenty of room...

    Bookmark   June 11, 2009 at 8:38PM
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