I am a member of most MLS boards in Florida. Many Realtors use our flat fee services for out of area listings when they are not members of the MLS board where their listing or short sale is located. I do business in Miami, Orlando, Tampa Bay, Naples, Sarasota, FL Keys, Ocala, Marco Island and just about every major city in Florida. Besides offering MLS listing services in Florida, I also have 50 exclusive right listings that are either active or pending. I also work with a lot of buyers.
Against my best advice, some of my listings are over-priced. I no longer just negotiate a deal to the highest point and let the appraisal process determine the fate of my deals. And I don’t tell my seller, “oh well, let’s look for a cash buyer.”
There is a better answer.
We start with an aggressive pricing strategy with homes that buyers love to buy. Typically these homes are “A properties” (meaning high quality) and possibly the best homes in their neighborhood (meaning they won’t appraise). Once we get a few offers, we take the best one (best price or best price and lowest loan to value) hoping that the appraisal will come in.
Once the appraised value is known, we attempt to get a deal done with an appraisal compromise but that seldom gets done with buyer 1. The buyer either doesn’t have the room in their loan (loan to value) to absorb the appraisal spread, or the buyer feels they will not pay over the “value” and walks on the deal.
There is value to the seller in this offer 1 failure. The seller gets a free appraisal and has a high-water mark to gauge the next offer. The harm done is lost time on the market and the negative impact of going from contract pending to back to active.
Now that we are back to “active” in the MLS and our internal system has notified all past showing Realtors of the “back on market” status change through our email system, we get a new round of offers. But this time we are looking for a buyer with enough cash on hand to handle the appraisal spread and add this language: “Buyer agrees to accept an appraisal value of “$X” or higher and pay the difference between appraisal and sales price in cash.”
This strategy is working well, albeit a lot of work, and I am helping the comps in the area go higher one deal at a time!