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Ep. 70: What Should You Do If Your Property Appraises Under Value? - Duration: 6:01.
Hello everybody, hope you're having a great day.
Welcome to California Realty Training's video blog here, what we call the vlog.
We're glad you made it this week.
We have some great information for you.
My name, again, and always will be, Robert Rico.
I'm glad you're here.
Listen, today's topic is gonna be a pretty cool one.
It's kind of crucial to your deals.
Once you get your license, the whole idea, of course, I mean the reason you join this
type of career, of course, I'm guessing is to make some money.
Most people when you ask them, "Why are you doing real estate?"
Of course, it's the financial rewards.
I get it.
We understand.
Now, sometimes once you get involved in a transaction, you got a buyer and seller
and you put them into an escrow, we talked about that before, an escrow.
So now you're in an escrow, you think everything is honky dory.
Everything's going fantastic.
You can't wait for this thing to be closed.
You can't wait to fulfill the obligation with your client, and you wanna make this happen,
collect your commission and make it all go away, and then do it again and again and again
and have a successful career.
But, every now and then, there's a bump in the road.
Listen, this is what I want you to do.
I don't want you to worry about the bump in the road.
This is the deal, one of the challenges you might encounter is an appraisal issue.
Now most of you out there know what an appraisal is.
Now, we know that an appraisal is a value or opinion on a home.
Of course, an educated opinion by a person who is called an appraiser.
Not a big deal.
What happens is this.
Let's just give an example that somebody buys a house or they wanna buy a house, they
make an offer on a house.
Million bucks.
Not a big deal.
Seller is selling their house for a million bucks.
Buyer says, "You know what?
I'll give you what you want.
I'll give you a million bucks."
Sounds like a beautiful deal, right?
You have the client whether it's the buyer or the seller, full price offer.
Yay!
It's gonna be a good day 'cause it's gonna be an easy deal.
They ask for something, we give it to them.
Not a big deal.
Let's close this deal in 30 to 45 days.
Got it?
Nice and easy.
First thing the bank's gonna do if you're getting a loan, if there's a loan involved,
before they give any money over to buy this house, a loan, they wanna make sure that this
house is worth a million bucks.
They wanna make sure the house is worth what the buyer's gonna pay for it.
That's called an appraisal.
So they send somebody out there.
Let's assume somebody goes out there, the appraiser goes out there, and they review
the house and they review the comparables.
Remember that word?
The comparables?
The appraiser comes back and says, "Hey, lender.
How you doing?
Before you give away this million dollars, before you give this amount of money, you
might wanna consider this.
We went out and did our appraisal, and we believe, as an appraiser, that the house is
only worth 900,000."
Uh-oh.
Now there's a problem.
The buyer offer a million bucks.
The seller is expecting what?
Yeah.
A million bucks.
But the appraiser says it's only worth 900,000, which means the lender's only gonna give what?
That's right.
900,000.
So we're $100,000 short.
What do we do?
Now you're freaking out, right?
You think, "Oh, my God.
There goes my deal.
My buyer offered a million bucks.
The seller accepted a million bucks.
Let's close this deal.
I wanna collect my two and a half percent commission."
Do the math.
Two and a half percent commission on a million bucks is what?
Do the math.
Yeah, that's right.
25,000 bucks.
We have a challenge now.
The appraisal came in short.
Now you're gonna flip out.
Most people would flip out.
"Oh, no.
That means the buyer's not gonna wanna buy it 'cause it's not worth a million bucks.
The seller's gonna get upset because he's gonna say, 'If my house is the best house
on the street, it's definitely worth a million bucks.'"
But the deal is this.
Whatever the appraiser says, whatever that appraisal dictates, whatever the value is
on that appraisal, which, in this case, is 900,000, that's what the bank's gonna go on.
They're gonna go based on that value.
So what do we do?
Our buyer is saying, "Well, I'm not gonna give you more than 900,000."
We got a seller saying, "Well, I'm not gonna accept anything less than a million."
Happens every now and then, not often, but it does.
But I want you to be prepared.
So what do you do?
What can you do?
Well, there's a couple of things you can do.
Of course, at all times, the first thing I want you to do is think reasonable.
Think reasonable at all time.
You don't wanna freak out, and run to your office, and say, "Oh my god.
This is blowing up" and go home and tell your spouse, "Oh my god.
We're not going to Hawaii after all.
Oh my god.
We can't buy the new car.
$25,000 down the drain."
You don't wanna go to your office and just ... No, no.
You gotta relax.
You're a professional.
You got a real estate license, and that means you're gonna think professional, and you're
gonna handle this.
You're an adult, you got that license, deal with it.
Now how are we gonna deal with it?
You gotta be creative.
How can I analyze this situation and make it happen?
Analytical thinking.
How can I make this happen?
Ready.
And you probably already know the answer.
You have somebody willing to give only $900,000, which is the appraised value.
You have somebody who's expecting a million.
In many cases, depending on the market, we'll have a seller who says, "Well, you know what,
you're right.
I guess it is what it is.
It's worth only $900,000, so fine.
We'll sell it to your for $900,000."
If it's a buyer's market, that's the way it works.
If it's a buyer's market and the seller wants to get the hell out of that house, they're
gonna say, "Well, it is what it is.
That's all the lender's gonna give you is 900,000, I guess that's what I'll have to
accept."
Now, if it's a seller's market, if the seller has the advantage and the seller says,
"Well, fine.
If you don't wanna give me the $1,000,000 like you promised on that RPA" ... Ooh, a
new word.
RPA.
Remember that?
Residential purchase agreement.
"If you don't wanna give me the million bucks like you promised on the RPA, that's fine.
I guess we can cancel this deal, and I'll get the next buyer willing to pay a million
bucks."
In this type of market, as you guys already know, there's very low inventory.
What?
There's very low inventory.
What does that mean?
The minute the buyer lets go of this property, chances of them finding another one is gonna
be very, very difficult.
In this market, many times what can happen is the buyer will say, "Well, fine.
The bank will give me 900,000.
I'll come in with the difference."
Or, the third thing is, the buyer and seller can negotiate and find a middle ground somewhere.
Find a middle ground somewhere.
Negotiate a price that feasible and reasonable for both of them.
Simple as that.
So listen, you're gonna find these kind of challenges in your career.
Don't sweat it.
You're an adult.
You have a license.
You can fix this.
We talked about it.
Think reasonable.
Think analytical.
Get some, maybe if you want, get some advice from your colleagues.
What would they do?
But I just told you.
There's ways of doing everything in this business.
You don't wanna flip out because if you worry, you're gonna make everybody around you worry,
including your clients, and we don't want that.
Hope this helps you some, huh?
Don't let the challenge of an appraisal coming in at low value bother you.
You could probably fix it.
All right.
If you have any questions or concerns ... Hey, listen, if you want us to discuss a certain
topic, do us a favor, huh.
Leave a comment below, and if you haven't already, what are you waiting for?
How many times do I have to tell you?
Subscribe to this channel.
Have a great day.
We hope to see you next week.
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Paolo and Christine (France) on what should change to stop gender-based violence - Duration: 1:14.
And what do you think, what should change in order to stop gender based violence?
Maybe the first thing would be the economic status,
which has already improved bit by bit with women starting to work,
But still today it's not that recognised
We still have lower salaries, and lower positions
Firstly, there's the Minister for Women's rights, but also the salaries
(Paolo:) Same work, same salary, - we've been talking about that, but it didn't happen yet (Christine:) It starts like that
And secondly, I think the feminist movements made a mistake by excluding men
No feminist movement will achieve success, unless it's a global one, including men
Otherwise if it only concerns women...
The fight is not against men, it's for changing the world, by teaching boys and girls
to live together and to respect equity and equality in life
Men and women are different, but at the same time they're the same
They're identical, so they have the same rights
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