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VOL. 38 | NO. 48 | Friday, November 28, 2014

Appraisals trail amount Middle Tennessee buyers willing to pay

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There are a few hot topics from the real estate world this week, the first being that appraisers seem to have hit the wall on the rampant price inflation.

With less inventory and more sales, sellers are resting in an enviable position inasmuch as buyers are forced to pay whatever is asked, or more, in order to acquire properties.

Since the Great Recession, the appraisers have been more heavily regulated. Lenders are required to hire appraisers through a bureaucratic process that keeps the appraisers at arm’s length – Lebron’s arm’s length – from the lenders.

“That should fix everything,” policy makers said.

In reality what that did was allow appraisers who are not aware of market nuances to make mistakes.

Some easy examples are West Meade versus Belle Meade and Sylvan Park versus Sylvan Heights, while more subtle examples would include the odd-number houses on Nichol Lane – not in Belle Meade – while the even numbers are.

The other fly in the ointment is that residents of some neighborhoods are not listing houses for sale. They are content to stay put, so the only sales in these neighborhoods are those that occur when someone dies, moves or falls into financial hardship – hardly normal comparables.

Recently a house sold for $279,000 within hours after having been listed for $289,000. The listing agent felt that there might have been other offers forthcoming had it not sold so quickly.

Then, the first appraisal came in at $245,000. A rebuttal appraisal was ordered and came in at $260,000.

But there were $3,000 in repairs, so the house sold for $257,000.

In today’s world, there is no need to push the market unless the seller is comfortable awaiting a cash buyer. And they want the cash discount.

Sale of the Week

The house at 1224 Otter Creek Road sold last week for $1,855,000, proving interesting fodder for residential real estate discussion.

First and foremost, the house, which rests on 3.7 rolling acres in Forest Hills, was appraised by Metro at $3,031,000.

Buyers like to refer to tax appraisals as the Gospel when they reflect a price considerably lower than list price. Conversely, when sellers are told their properties are worth less than the Metro tax appraisal, they argue the appraisal is the standard and cannot be refuted.

On the 1224 Otter Creek sale, Metro missed it by a mere $1,176,000.

This discrepancy is more drastic than most, but we must remember that Metro never set foot in this house. If a representative of Metro had stepped inside, that person would have seen walls, and more walls, and more than 11,055 square feet of floors, and that’s all. That’s all with the exception of the dings in the walls, the outdated décor with no furniture to bring the house to life.

Another issue is that the tax records reflect square footage of 11,055, and the actual square footage is 9,225 with an additional 2,340 in a pool house, which is not given as much value by buyers or, as you read above, appraisers, at least those in the private sector.

The delightfully positive Angie Smith did all she could with the product provided when she listed the house and employed a number of marketing tactics that might have worked had the home been staged.

Unfortunately, during an estate sale held prior to the home hitting the market, the house was staged as a department store replete with a section boasting a collection of hunting knives that would have put Jim Bowie to shame and an assortment of weaponry that may have provided for a different outcome at the Alamo had the Tejanos visited Crockett and his group before the battle and attended the sale.

The house had been purchased in 2006, at the market’s last peak for $2.5 million, and is an example that all properties are not back to 2006 prices, especially if they have not been updated to the satisfaction of today’s buyer.

If the house has the kitchen with granite, stainless steel, custom cabinetry and a gathering room off of the kitchen, a master bedroom on the main level, cubbies for the kids, a flat or gently sloping lot, trees, neutral colors, no- synthetic stucco exterior, clean lines – no wacky crown mold or trim, then it will sell for top dollar. If any of the aforementioned features are missing, then the house will sell for less.

Smith, a highly regarded 17-year veteran, noted that much of the house had never been inhabited, and it showed.

Regina Arledge of Reliant Realty represented the seller.

It is in situation such as these that there are potential deals out there. In this case, all that was required was a buyer with $1,855,000 to burn on a fixer upper.

Richard Courtney is a real estate broker affiliated with Christianson, Patterson, Courtney, and Associates and can be reached at ricahrdcourtney.com

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