How We Overcame A Flawed Appraisal And Got This Grove Home Sold!
Congratulations to our seller who just sold her home at 2564 Trapp Avenue. This 3 bedroom, 2 bath property offered 1,684 square feet of living area on a 5,148 square foot lot. It closed for $812,500 or $482.00/square foot. The home was built in 1987 had been renovated with impact glass, new roof and Black Walnut wood floors. The interior of the home had bright open living spaces with vaulted ceilings that overlooked the private pool and lushly landscaped gardens. It was situated on a tree lined, no-thru traffic street.
At The Riley Smith Group we do our best to make every transaction as smooth & stress-free as possible. However, there are some issues that can arise which are out of our control. For example, the market continues to struggle with bad appraisals, particularly when dealing with larger lending institutions. We saw this play out at 2564 Trapp Avenue. The first appraisal came in significantly lower than our contract price. How could this happen? The appraiser was from out of the area (which is what happens when you use a non-local lender) and was not familiar with the Grove’s quirky real estate market. They used comparables that sold for land value, they did not make the correct adjustments for the chosen comparables, and they used erroneous information.
With such a low appraisal, the buyers were worried that they were overpaying for the house (and understandably hoping for a reduction in price). We dissected the appraisal and wrote a letter to explain to the buyer exactly why we felt it was flawed. Below is a portion of the letter that we sent:
We believe that the comparables the appraiser used (listed below) and the reasoning for adjusting the numbers are erroneous, let us explain:
xxxx Swanson Avenue*: The size of this house is dramatically smaller (appraiser’s generally try to choose homes within + or – 20% of the SFLA) with only 1 bathroom and was built in the 1930’s.Without doing an inspection of the home there is no way to determine if the house was structurally sound, needed a new roof or needed the electrical & plumbing systems replaced as is common with many homes built over 75 years ago. The appraiser also noted that the home had impact glass which is not mentioned on the MLS. The appraiser also shows the home as being 1,105 SFLA but the MLS says the home is 931 SFLA.
xxxx Tequesta Lane*: This home had no pool and a 3,500 SF lot with no room to add a pool. Homes without pools in the Grove are much more difficult to sell which generally results in a much lower SPPSF. The appraiser adjusted for the lack of a pool by subtracting $15,000 which is far below the cost to add a pool and far below the negative effect on overall value.
xxxx Kirk Street*: We sold this home to a builder for land value. It is being torn down. The seller bought the home with the intention of gutting and expanding it but determined that the cost would be so high that she would have over-invested in the property and would not be able to get her money out if she decided to sell. If the appraiser would have checked with us we would have explained this to her.
xxxx Overbrook Street*: This is a 1950’s home that sits at the corner of Overbrook and SW 22nd Ave. which is a very busy corner. Also, the house does not have impact windows and has a unique layout because of the way it has been expanded over the years. (we sold the home a few years ago and are familiar with it).
The appraiser notes that they gave the most weight to Swanson and Tequesta which we see no logical basis for as noted above.
Below is a link to 9 comparables which, based on our knowledge of the Grove market, substantiate the SP/SF Trapp is under contract for ($482).
Please contact us if you would like to discuss.
*Exact addresses were removed here to protect the privacy of the current homeowners.
After some back and forth, the buyer agreed to try a different lending company and got a new appraisal which came in right on the money. We closed a few weeks later.
This is just one example of the many issues that can arise in a transaction. As Coconut Grove’s top producing Realtor for 7 years, I am able to help my clients overcome these bumps in the road and get the deal to the closing table. Contact us today at 305-342-1623 if you are interested in buying or selling a Coconut Grove home and would like to benefit from our years of experience.