The Big Risk Of Overpricing
Real estate agents and buyers see this everday: Sellers who have their property overpriced and won't reduce the it. They want their "number" and are willing to wait to get it.
The risk such sellers are taking is that they will find a buyer willing to pay their inflated price.
Risk? What risk? You found a buyer for the property, right? What's the risk?
Here's the risk: The risk is that the buyer will need a mortgage. Along with that mortgage comes an appraisal of the property by a certified appraiser who represents the mortgage company. Remember, Mr. Seller, the appraiser represents the financial interests of the bank.
Banks won't lend money for more than a property is worth -- especially with today's banking rules. So, those appraisers have become very conservative in placing a value on property that will have a mortgage.
The mortgage company may not share the buyer's excitement about paying too much for your property. Who determines that the price is too much? Why, that friendly appraiser who just walked around your house taking digital pictures, that's who.
If the appraiser goes back to the mortgage company and files his report showing your house is not worth the price, well, the mortgage company simply does not issue the mortgage to the buyer. No mortgage, no closing. No closing, no sale. Simple as that.
So, even if you find a buyer for an overpriced property, most likely the sale won't go through. And you, Mr. Seller, get to start all over again looking for another buyer willing to pay your inflated price. I'd call that risky business, wouldn't you?
There are a lot of risks in overpricing a property. The appraisal is just one of them. Want to avoid this kind of problem? Simply price your property at true market value from the very beginning.
The fact is that every house will sell at market value. And not a dime more.
The risk such sellers are taking is that they will find a buyer willing to pay their inflated price.
Risk? What risk? You found a buyer for the property, right? What's the risk?
Here's the risk: The risk is that the buyer will need a mortgage. Along with that mortgage comes an appraisal of the property by a certified appraiser who represents the mortgage company. Remember, Mr. Seller, the appraiser represents the financial interests of the bank.
Banks won't lend money for more than a property is worth -- especially with today's banking rules. So, those appraisers have become very conservative in placing a value on property that will have a mortgage.
The mortgage company may not share the buyer's excitement about paying too much for your property. Who determines that the price is too much? Why, that friendly appraiser who just walked around your house taking digital pictures, that's who.
If the appraiser goes back to the mortgage company and files his report showing your house is not worth the price, well, the mortgage company simply does not issue the mortgage to the buyer. No mortgage, no closing. No closing, no sale. Simple as that.
So, even if you find a buyer for an overpriced property, most likely the sale won't go through. And you, Mr. Seller, get to start all over again looking for another buyer willing to pay your inflated price. I'd call that risky business, wouldn't you?
There are a lot of risks in overpricing a property. The appraisal is just one of them. Want to avoid this kind of problem? Simply price your property at true market value from the very beginning.
The fact is that every house will sell at market value. And not a dime more.
-30-
posted by Terry Ward at 4:52 AM
0 Comments:
Post a Comment
<< Home