How to help a homeowner understand the FMV without an appraisal

10 Replies

Homeowner wants to sell their home for $360k. The comparable homes sell for $260k.

How would you help them understand how much their property is actually worth without ordering an appraisal?

@Brandon P. The best way to educate your clients and earn their trust is, to be honest. Pull comps of a one-mile radius around his property. All homes sold and are pending in the last three months. Then do research on square feet, year of build, upgrades, schools, and neighborhood. Print a CMA/comparable report and share with him and explain to them market trends and holiday seasons. The seller has the right to decide it but most of the time they don't know the market and inventory.

I appreciate the advice Ellie. I will work with my local realtor to pull the comparable sales in the last 3 months. 

Originally posted by @Ellie Adams :

@Brandon P. The best way to educate your clients and earn their trust is, to be honest. Pull comps of a one-mile radius around his property. All homes sold and are pending in the last three months. Then do research on square feet, year of build, upgrades, schools, and neighborhood. Print a CMA/comparable report and share with him and explain to them market trends and holiday seasons. The seller has the right to decide it but most of the time they don't know the market and inventory.

 

Deliver the comps and analysis, with your offer, and leave your card and then leave them alone. Most sellers who are 100k over market value know they are 100k over market value or are never going to be at market value until they are desperate. Why spend time trying to convince someone to sell for 100k under what they want when you can spend that energy on a seller who is 10k off of your price? Too much work on this is a waste of time. You should have options so that you don't spend your time on this.

@Brandon P. I always present the comps and market value using very specific language to help take myself and seller personally out of the equation "from the standpoint of an appraiser" or "this is how the appraisers will look at it" or "this is the market value from the eyes of an appraiser" 

Make sure the comps are recent and are true comps.

What is your role? Are you trying to buy the house to renovate and flip? Are you trying to wholesale? Are you looking to turn it into a rental? Are you an agent looking to list?

Have you reached out to any local appraisers? You may find one willing to do a drive by appraisal for fairly cheap. 

Whether or not you have the ability to convince the homeowner that they are way off- why waste your time? Is there something about this specific property that you are interested in? If not, people lose their homes to foreclosure all of the time because they don't want to listen to reason or believe that they will actually lose their house. In my market, anyone who is in preforeclosure or financial distress is hit up by wholesalers regularly and most of them do exactly what you describe here. Built rapport and trust and IF they actually face the fact (probably with very little notice, so you always need to have funding or cash ready to move) that they are going to lose their house, they will remember that you were likable and trustworthy and they'll call you back. 

“Consider how hard it is to change yourself and you'll understand what little chance you have in trying to change others. ”  -Jacob M. Braude

Be empathetic, trustworthy, professional, and be a closer and if they ever really intend to sell, you will be on the short list...but don't waste precious time.

@Brandon P.  

Unless this Seller is living under a rock and does not have access to the Internet and only use a fax machine to communicate with the outside world. 

My guess none of the above is even close to accurate, so in that case, they know that their property isn't 100k more in value. 

WHAT WE CALL these sellers are UNMOTIVATED. Let go and move on.  

Thats right, I had a look at the property and they were extremely unmotivated. They were misleading and very desperate to sell.

They had purchased the property 3 years ago when our market was starting to turn downward and are likely underwater with the mortgage. I went and had a look thinking it might have been some elderly people that were motivated to sell but it turned out they were just really desperate and out of touch with the current market.

Thanks for the post!

Originally posted by @Ola Dantis :

@Brandon P. 

Unless this Seller is living under a rock and does not have access to the Internet and only use a fax machine to communicate with the outside world. 

My guess none of the above is even close to accurate, so in that case, they know that their property isn't 100k more in value. 

WHAT WE CALL these sellers are UNMOTIVATED. Let go and move on.  

 

We don't have many foreclosures in the market. I assumed it was an elderly owner judging by the lack of updates in the house and they were just trying to make some extra money selling it privately.

The property was in a great location in a desirable area with good development potential in the future for an additional home on the lot.


Originally posted by @Corby Goade :

Whether or not you have the ability to convince the homeowner that they are way off- why waste your time? Is there something about this specific property that you are interested in? If not, people lose their homes to foreclosure all of the time because they don't want to listen to reason or believe that they will actually lose their house. In my market, anyone who is in preforeclosure or financial distress is hit up by wholesalers regularly and most of them do exactly what you describe here. Built rapport and trust and IF they actually face the fact (probably with very little notice, so you always need to have funding or cash ready to move) that they are going to lose their house, they will remember that you were likable and trustworthy and they'll call you back.