Any recourse for agent’s bad appraisal?
Dear Real Estate Adviser,
Per my agent’s advice, I listed my property at a low price and got a full offer within one day. I’m now finding out the agent lied about several things and priced the place without factoring in $20,000 in recent upgrades, despite saying she had. When I finally caught on, I asked her to provide email proof of her dialogue with the buyer’s agent, and she sent an email that looks like she had just typed in the other agent’s responses. Do I have any recourse? Or am I just dumb for not getting an appraisal on my own instead of trusting my agent?
— Gaby H.
You’re not dumb, just under-researched and a mite too trusting, perhaps. In any transaction where there are buyers, sellers, financiers, agents and intermediaries, there’s always a chance someone will try to game the system. Those odds seem to rise when there are six figures changing hands.
You could have hired an appraiser
As you’ve discovered after the fact, hiring your own licensed appraiser would have saved you some money, though perhaps well under the 20 grand you’re imagining. Certainly, an appraiser would have been able to calculate a more accurate value opinion by factoring in those upgrades and all your property’s features, while eyeing local data on sales of similar homes (“comps”) and other market intel.
Unlike buyers, who typically need appraisals since lenders won’t authorize mortgages without proof of value, a seller isn’t obliged to get one. Besides providing a credible value estimate, an appraisal also sends a message to agents and buyers that you’ve done your homework and they shouldn’t expect a walkover.
Get out your calculator
Since you were immediately given a full offer with no dickering, it seems to reinforce your position that the price was set too low. But how much this really cost you in the aggregate is hard to say. On a home listed at $200,000 instead of $180,000, for example, there would at least have been some price negotiation depending on how hot your market is. The national price-off average for this kind of dickering is roughly 4 percent at present, which would have shaved off about $8,000, at least hypothetically.
Additionally, upgrades rarely return their full cost in a sale; Remodeling magazine’s 2015 “Cost vs. Value Report” shows sellers recover only about two-thirds on average. So, let’s say you’d have eaten another $6,600 there and about $400 on the appraisal. That would bring your total sacrifice on a market-priced $200,000 home to $15,000, assuming you’re assigning no additional value to a quick sale.
Agents like quick commissions
As for the agent: though you’d seldom get them to admit it, agents often work in cahoots to grease deals to generate quick commissions. When you do the math, a fast sale overrides a market-price sale in many agents’ books; holding out several months for an additional $10,000 or $15,000 for the seller nets them very little additional commission for their added effort. Sure, your agent may have told you something like, “Your first offer is usually your best offer,” which is largely fiction.
Whatcha gonna do?
You can raise a ruckus and demand she and the other agent take less commission — say, 4 percent instead of 6 percent — and hold your ground when she and the buyer’s agent say “ha-ha.” They may actually budge if you threaten to file a complaint with the agency, local real estate association, governing licensing board, Better Business Bureau or all of the above. Failing that, you can try proceeding with the formal complaints, but must first pull together all supporting documentation, including those possibly doctored emails.
But you should also ask yourself how much money is really at stake, given the math, and go on from there. You may just decide the end sum isn’t worth the aggravation and write off this deal as an expensive lesson.
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