What if my appraisal comes in low?

appraisal2It has been known to happen.  A seller puts their house on the market.  A prospective buyer makes an offer.  The seller accepts it.  Now the real work begins.  Next come the inspections, physical, pest, HVAC, roof, pool, etc.  And if the buyer is getting a loan, the most important one of all…the appraisal!

What is an appraisal?  Well it is basically how the lender determines if the home is worth what they are being asked to loan.  But it’s more than that.  The appraisal is an opinion of value at the given moment.  Huh?  You see, appraisals can change on the fly based on what the market is doing.  As an example, let’s say your appraisal came it at a value of $480,000, and that is what the accepted offer was.  Great we have a deal.  Now let’s say the next day the exact same floor plan closes at  $500,000.  There is a new baseline established and the buyers just benefited by having the equity rise by $20,000.

But what happens if the appraisal on that $480,000 offer came in at $460,000?  The lender is not going to loan on a property that they feel is not valued at the agreed upon sales price.  In essence the seller has to sell the home twice, once to a buyer and then to the lender.  So now a renegotiation between the buyer and seller takes place and typically there are a few outcomes that happen.

  1. The seller can lower the price to the appraised value.
  2. The buyer can agree to pay the difference and bring in more cash.
  3. The buyer and seller can split the difference.
  4. The deal can be cancelled and everyone goes their separate ways.

If an agreement cannot be reached, and the contract included an appraisal contingency, meaning the home had to appraise at the agreed upon price or higher, the buyer can cancel and get their deposit, if any, returned in full without penalty.  It’s also important to remember that an appraisal is an opinion of value in a given moment.  So if a seller had an appraisal done say 3 months ago, the lender will not accept that and will still have an independent appraiser go out.

The last thing to consider is that depending on the type of financing the buyer is getting, the appraisal could be more detailed.  As an example, if the  buyer is getting an FHA or VA loan, the appraiser may “call out” things like chipped paint, structural issues, mold and the systems in the home.  If you are thinking about selling, you need to understand how the financing terms you will consider could affect the appraisal and ultimately the sale.  So it’s not just about price, consider what types of terms will be acceptable to you.


Proud to serve

The Pacific Southwest Association of REALTORS (PSAR) recently announced the 2018 Board of Directors.  I was honored to be nominated and elected to serve our members for 2018.  PSAR is an organization that is dedicated to serving our REALTOR and affiliate members and provides a much needed voice to local and statewide matters affecting real estate and home ownership.

According the the PSAR website, “The Pacific Southwest Association of REALTORS® exists to enhance the real estate profession, to protect private property rights and improve the regulatory environment. The Association maintains a leadership role today assuring each REALTOR® member the opportunity to seek new heights in their professional lives. Being a REALTOR® is a source of pride and prestige.

Congrats to all the incoming Board.  For more information please visit PSAR here.

Not so boring market stats…

It’s no secret that San Diego is in the midst of a once in a generation type sellers market.  My question is, “Do you really, really get that?”  I mean really?  If you are in your first home, a “starter home” type property, now may be the best opportunity you ever have to cash in and move up.  Now, there are a few considerations and challenges:

  • Prices are high
  • Inventory is low
  • Interest rates are holding

So what does that mean?  High prices will benefit you as a seller, so that’s good!  The flip side is you will pay more for that move up property.  The questions is, “Will it be worth it?”  I bet yes, if you are planning to buy your home for life…where you will be for the next 15-20 years or more.  That’s the trade off, get what you want now for the long haul.

Low inventory means your options might be limited in some price ranges and locations.  Keep an open mind on these things and you should be OK.  One word of caution, as this is an EXTREME sellers market, don’t low ball!  Come in with your best offer out of the gate and understand you probably will be in multiple offer situations.  Focus on the end game…your “Forever Home”.

Interest rates and loan options could be your saving grace.  You can get into a home for less money out of pocket, and a monthly payment that could be close to your current payment.  Find a good lender who will work with you to create a loan that works for your situation and not try to push you into “the loan of the month”.

Below are some visuals on a few core metrics I track to gauge the market.  This data is pulled from the SANDICOR MLS using a platform called InfoSparks.



If you’d like to see market stats in your neighborhood, please let me know. I can pull this down to the zip code or community level and would love to share what your hyper-local market looks like.

Welcome to Real Estate Life.


Hey everyone. Man, it’s been a minute since I updated my blog!  So long in fact, that I decided to completely scrap the old and relaunch with a new look and updated design.  So welcome to Real Estate Life!

Of course I spent several years publishing The Real Estate Rap, and decided to keep all that content (well most of it anyway) in tact.  So there are a ton of old posts you can check out…or not…if you’d like.  I am making a commitment to post twice a week, with a different flavor than I previously did.  The focus will be more on the lifestyle of an active real estate professional in San Diego.  And really more like the lifestyle of a family of Realtors, who live, work, and play everyday in our amazing part of the world.

If you didn’t know, my wife Kathy, is a fabulous Realtor as well!  In fact she is a Top 10 performer with Keller Williams in La Mesa.  She works all over San Diego, mostly by referral, and is one of the best negotiators I know.  Our son, Cooper, just graduated from San Diego State University with a degree in Business Management and Entrepreneurship.  Cool, right?  Oh, and he also just got his real estate license making him the 3rd generation of Realtors in our family.  Kathy’s mom and step dad got it all started for us way back in the day.

So there you have it.  A newly revamped blog, some background on who the heck we are, and a look into what you can expect going forward.  I hope you’ll check in later as I promise to share some shenanigans from a fun event I’m going to tonight sponsored by the Pacific Southwest Association of Realtors.  Fun fact…in real estate, if you play your cards right, you’ll get plenty of free food and drinks!  Later!


What is the # 1 challenge facing the San Diego real estate market today?


Are you building a business or just chasing deals?

One of the huge benefits I get by being a Team Leader with Keller Williams is access.  Access to the highest level thinkers and doers in real estate.  The talent I can tap into at any given time is amazing and makes such an impact on what I do each day.  Out of this I, in turn, get to make an impact on my staff and associates.  And that is what it’s all about…being a resource to help others live their best lives and build a thriving business.  Notice I said “Business” and not real estate business.  You see we view our associates as business owners and not just agents.  This is a fundamental difference between us and the rest of the industry…that we work for our associates…they don’t work for us.

mreaIn the Millionaire Real Estate Agent (MREA) book Gary Keller shares the 4 models that comprise the KW way.  They are the Economic, Budget, Lead Generation and Organizational models.  I work each day to ensure these are ingrained into our associates so they can do what the book teaches.  And that is to build a career worth having, a BUSINESS worth owning, and a life worth living.  So MREA is not something you read once and set up on a shelf.  It’s an operations manual that is to be referenced constantly as you move through your career.  Which brings me to my point and poses a question.  How does one really tap into MREA at a high level and maximize it’s lessons to build a profitable business?

The answer…Commitment To Excellence!  CTE is a platform that literally brings MREA to life and allows you to implement each of the four models.  This amazing tool incorporates each of the models, their formulas, and strategies into one seamless tool where you can plan, execute, and track your results in real-time.  And it grows with you.  So as you add staff and additional team members you can plug them in and watch as they work towards accomplishing their goals and your teams as well.  CTE address the six reasons agents fail.

  1. They don’t know their numbers.  In fact I’d go so far as to say most agents don’t even know what numbers they should know.
  2. They focus on buyers instead of sellers.
  3. They don’t lead generate consistently.  MREA teaches the 4 Laws of Lead Generation as a fundamental aspect of a highly successful real estate business.
  4. They fail to hire the right people.  KW also teaches Recruit Select so you can constantly attract talent and ensure they are in the right job.
  5. They fail to implement systems.  CTE is that system!
  6.  They don’t write a business plan.  This is incorporated into CTE as well.

I would like to invite any real estate agents who are out there just chasing deals to take a hard look at implementing this system.  Ask yourself what challenges do you have?  What is the one thing about your business that keeps you up at night?  And where can I get real help in building the kind of business I deserve?  Right now CTE is exclusive only to KW associates.  At KW La Mesa we provide it FREE to all of our associates.  If you are with KW ask your Team Leader about it.  If not I invite you to connect with me to learn more about CTE and Keller Williams.  There is a reason we are ranked as the #1 training company in any industry!  And CTE is just another example of our commitment to keeping real estate an agent-centric business where our associates have the best opportunity to grow, thrive, and create any opportunity they want.


Lead Generation Law #2…Feed the Database

LeadGenLast week I covered the first law of lead generation which is to build a database.  Law #2 states, “Feed it everyday.”   You have two options when it comes to feeding your database.  You can fill it people you have met or those you have not met.  Let’s start with those you know or have met.  This group is significant in that you probably have some kind of relationship in place with these people.  But a few things to consider here.  First, as you add these folks into your system it is important to categorize these leads into groups.  Start with the people you know really well, this includes close friends, family, neighbors, etc.  Keep it simple in terms of group names so you will know exactly who is in each group.  The next group might be people you come into regular or semi-regular contact with.  This could include people from church, your kid’s school or sports activities, heck even your Starbucks barista., dry cleaner or grocery clerk.  The next group is very important as well.  People you have done business with!  Some in real estate call this group “past clients”.  I don’t like that term because it infers I won’t do more business with them.  I just like to call them “Clients”.  We’ll talk more about this group next time, but get them into your database!  The next group for the “Met” category will be those you have met in your lead generation activities but have not yet transacted with.  These folks may not be quite ready or are in the tire kicking phase.  A very important group we will discuss more as well.  Lastly don’t forget your allied services.  Title reps, escrow officers, loan officers, etc.  They are always hitting you up for leads and you need to be doing the same!

Let’s move onto the “Not yet met” category.  This group is made of people you have spoken with but have not yet had a meeting with.  Maybe they called you on a mailing or you called them during your routine prospecting time.  This group will be HUGE!  And by that I mean in terms of sheer numbers.  You will talk to a ton of people you will never meet.  But that does not mean you can’t generate business from them!  Follow the same process for adding these folks into groups, however you will most likely use more specific group names like FSBO, expired listing, cold call, etc.  It’s important to use easy to understand group names so you have a point of reference when it’s time to contact them.

The last point I want to make, and one I will expand on later, is that the “have not met leads” will be a lot more in term of the amount of people in this category.  The way it works out for lead per sale ratio is, for every 50 have not met, who you market to 12 times, will turn into one sale.  So a lot more work here compared to the met group, but again I will go into more detail next time.  I’ll wrap up saying again, my job as the Team Leader/Chief Business Strategist at Keller Williams in La Mesa is to help you accomplish your goals.  So why not start today by reaching out to me to set up a business analysis and planning session to get you heading in the right direction?  I’ll be back next week with Law #3 and until then have a great weekend!