Hello everyone and Welcome to another

episode of Selling Greenville your

favorite real estate podcast here in

Greenville, South Carolina, I'm your host

as always Stan Mccune realtor right here in

Greenville, you can find all of my

contact information in the show notes if

you need to reach out to me for any of

your real estate needs just a reminder

as always please like, rate, review

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supports the show in a very small way

that's all I ask of you guys that use me

as your realtor and support our sponsor

which I'll get to here in a few minutes

and if you guys could do that I would

really appreciate it a few years ago

I did a podcast episode on overpricing

listings and I referenced this recently

in recent episode it was it was a

really important study that I did

important for myself I'm not saying it

was important for anyone else but for

me it was really important because the

conventional wisdom has always been

among Realtors and real estate

professionals that you never want to

overprice a listing right if you if it's

worth 300,000 you don't want to price it

for

325 and that you know frequently has

been something that people just say

right and so I heard people say that

over and over again but I wanted to

actually see what the data said does the

data support this claim and so I I I did

a a bun a big analysis on data in the

greater Greenville area and I con cluded

that on average homes that were

overpriced when they were initially

listed and I defined it as overpriced

by

$15,000 or more on average sold for $12

a square foot less than homes that were

not overpriced to that degree or that

were either priced appropriately or even

underpriced so people conventionally you

know a lot of people out in the public

they they think well if I list for 315

as opposed to 300 I will end up getting

more than had I listed for 300 well that

conventional wisdom among the the

general population is simply not true

unless unless 315 was not an

overpriced amount right if the home is

worth 300 and you you list it by you

list it by at 325 you're going to

end up hurting yourself you're going to

end up selling it for less than had you

listed it for 300 or

315 now I want to revisit this topic

from a different perspective

specifically from the perspective of

listings that already have appraisals

now sometimes listings come on the

market or come back on the market with

an appraisal in hand for for instance

just to give an example a seller might

have recently refinanced and they might

have a copy of their appraisal or

perhaps they paid for an appraisal due

to the home having unique features or

perhaps they have a copy and Appraisal

from a buyer who attempted to purchase

their home but then backed out

now I need to to caveat a few things

with regard to appraisals when a seller

has an

appraisal they and you have to keep

several things in mind first off

appraisals are extremely subjective I

know if if you're an appraiser you're

listening to this maybe you don't want

to hear that but I'm telling you

everyone else in the world believes that

appraisers and appraisals are subjective

and obviously there are certain there

are certain standards that all

appraisers have to abide by but when it

comes to the final valuation that tends

to be extremely subjective in terms

of what that valuation comes back as

I've had as an example multiple times in

my career where I've had two appraisals

on the same home done within a few weeks

of each other with no material

differences to the home during that

period of time and had those two

appraisals come back in some cases

$30,000 apart in some cases $40,000

apart and and the biggest discrepancy

I've ever had was $50,000

departure between two appraisals

taken within a very short period of

time on the same property so

appraisal are very subjective

additionally appraisals don't really

take the current state of the market

into account as much as they do what has

happened in the past now it's not to say

that they don't take the current state

of the market into account at all I'm

not saying that but the main emphasis of

an appraisal is comparing the subject

property to other properties that have

have sold the past year maybe even

sooner than the past year if possible

and and of course that's a lot different

than what buyers care about we just

talked about this in the last episode

buyers care more about what's currently

on the market than they do what's sold

the past year now buyers will will look

at what's sold the past year and they'll

they'll look at comps and they'll

they'll assess whether their home is

overpriced but at the end of the day the

the homes that they are looking at are

the homes that are currently on the

market not homes that sold a year

ago couple more points here appraisals

generally have more value for lenders

than they do for buyers or sellers I've

had my more detailed buyers sometimes

even get upset at appraisers for

giving a home the same value as the as

what the contract on that home was

because they felt like the appraiser

wasn't really doing his or her job right

and coming up with the with a precise

amount independent of the contract price

so what I'm saying is let's say the

contract is for 300,000 and the

appraiser just kind of rubber stamps

that and says you know I'm just going to

give the value for this home a $300,000

value that's a very common practice

and yet I've had some some clients

that have been upset by that that they

feel like well an appraiser should

should be more specific and should be is

it I mean surely in his or her mind it's

not worth exactly what the contract

price is that seems Bush league but the

reality is that appraisers do have the

contract in the back of their mind when

they're coming up with a value and

and quite frankly I think that they

should I don't think that that is a is a

flaw I think that that is a a good part

of the process because they typically

don't want to blow up a deal and most

people buying or selling real estate

don't want the deal blown up and

and so you know if an appraiser priced a

home $5,000 less than the contract

when they are simultaneous using very

subjective metrics like saying this home

is you know the subject property is

is updated

$225,000 more than than the comps that

they're comparing it to I mean that's

all very subjective H how do you know

for a fact that one home is truly

updated

$25,000 more than another by the way

I need to I just realize I need to

turn my phone on silent making a rookie

mistake over here took me getting a

not ification on my phone to realize I

had made that mistake apologies for that

but yeah if if you're just kind of

and of course there they're not just

ballparking these numbers when they're

making adjustments to the comps you know

they don't just pluck you know $25,000

out of the a at least the good ones

don't but there's still so much

subjectivity to that in determining okay

this home with all these different

updates it's you know it looks like it's

updated about $225,000 when you're

already putting that level of

subjectivity into it and then after

doing all of that you come within $5,000

of the contract price on a $500,000 home

why not just go ahead and just say you

know what we're close enough we're in

range I'm just going to give it the same

value as what the contract is worth I

feel like that that process I don't I

don't feel like that there's a problem

that I specifically have with an

appraiser having that process and I've

had a lot of conversations with the

appraisers over the years explaining to

me that process and it and it does make

sense

that being said another caveat

that I think is worth mentioning about

this is that some appraisers in my

opinion have weird rules in their head

that the rest of the real estate

market simply doesn't have so for

instance most of Greenville

appraisers I've communicated with

automatically consider basement square

footage and by the way a basement is the

way I understand it the way appraisers

deem it if any part of of the house

right is or any part of a section of a

house is 1 in or greater below grade it

is a basement so that's a pretty extreme

metric right I've got a split level home

that I use for an Airbnb and one just

the front elevation of the bottom

portion of the split level home is a few

feet below grade the rest of the

elevations all around the house are not

below grade and because of that

that's considered a basement and here's

what has happened every time I've gotten

that home appraised the appraisers have

given that square footage 50% value in

other words if the home is considered

generally speaking the above grade

portion of the home is considered to be

worth $200 a square foot then the

basement square footage will be

considered $100 a square foot just it

nothing else matters doesn't matter if

the basement is way nicer than the rest

of the house they're going to

automatically use that 50% rule and

now I've had some appraiser say well you

shouldn't do that that is not you

shouldn't just automatically do that for

every single house but I'm telling you I

have had four to five appraisers say

yeah every single basement home I just

automatically give it 50% square footage

and I've had some argue with me over

this some have said well I I'll just

say this I've I've had an argument with

with some appraiser there's one of which

blocked me on Facebook because I guess I

think he didn't like my political views

but I I had a discussion with

with one appraiser in particular

about this a long discussion where I was

like okay explain to me how this makes

sense right because you're you're trying

to assess the market the real estate

market and undeniably if we're

talking about the real estate market

again we're not talking about comps

which is more what appraisers are

focused on but if we're talking about

the real estate Market just in general

buyers and sellers of real estate buyers

typically prefer a basement home any day

of the week over a two-story home right

basement homes are just the rare in

Greenville we don't have a ton of them

and they typically are very popular

people would much prefer to have a

basement than a second or third story on

their home well again appraisers

that that's subjective I understand that

there's not data necessarily that that

you can that says that but but

when I said that to WAN praiser his

response was well even if that's true it

doesn't take into account the fact that

basement homes are cheaper to build than

two-story homes and that I didn't even

know what to say about that because I'm

sorry I've talked to a ton of

contractors about basement homes and

there is not one that you can find in

the Greenville area I can promise you

you find me one that will build you a

basement home for cheaper than they will

build a two-story home that is a

complete myth basement homes are harder

to build they're more expensive and

you've got to waterproof them you've got

so much more that you have to do with

the foundation it makes no sense that it

would cost less and therefore we're

going to appraise it for less it's a

complete myth and you know I hate it

when people use talking points like that

and I've lived in I've already

referenced one basement hes I I've lived

in three basement homes over the years

I'm actually recording this from my

basement this is where I record all

of my

podcasts and and I've seen this Dynamic

play out in real times many times in my

life because I've had multiple

appraisals for multiples of these homes

and every single time I get a 50% value

on the square footage for the below

grade portion of the house so I'm not

just making this up the but these are

the sorts of weird re weird can't talk

weird rules that sometimes appraisers

have in their head that don't

necessarily make sense to to anyone else

but these are the rules that they are

operating by and I don't mean that to

insult any appraisers I'm not calling

out anyone in particular I'm just saying

this is what I've seen happen with a

lot of appraisers over the years in my

opinion the good ones factor in more

than just you know this is my rule my on

siiz fits all Rule and there are a lot

of good appraisers that do that a lot

of good ones that that I've talked to

and maybe some that I'll I'll get on the

show at some point in the future but

the reality is that you have

conversations with some of these people

and you will find that some of them

have some kind of odd rules that they

follow

by I've seen this happen multiple times

and you know who else has seen this

happen multiple times Stephen Piper with

Piper Insurance Group who is who I

call anytime I want to vent about

basement appraisals being lower than I

think they should be because he has has

had that very experience as well with

his home or at least I don't know if he

still lives there but but we had some

lengthy conversations about this in the

past but Stephen is also who I call

anytime I want to get an insurance quote

and a piper Insurance Group is the

official sponsor of the selling

Greenville podcast they can help you

with your home Auto or Umbrella

Insurance they're independent as an

insurance agencies so they can quot

multiple different insurance companies

and bring back the best rate that they

can find between all of the companies

that they work with they're licensed in

in more than just South Carolina you can

also use them in North Carolina more

than South Carolina you can also use

them in North Carolina and Georgia and

they can help you with investment

properties not just primary residences

so if you need to ensure flips rentals

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commercial properties they can help you

with all of those things their contact

as well as mine is in the show notes so

if you need if you need insurance

Home Auto Umbrella Please go to the show

notes for this show and find Piper

insurance group's information and give

them a call today for a free quote all

right so now that we have all the

appraisal caveats out of the way let's

get to the matter at hand I decided to

see what I could find for starters in

the multiple listing service on listings

that reference that they had had

appraisals done at some point in the

process of listing or relisting a home

it's not easy to find them and I'm sure

I didn't find all of them but I found

about 37 listings specifically in

Greenville County there was a reason

why I was doing this not just on the

greater Greenville area but just

Greenville County not going to get into

the Weeds on that because it's kind of

Irrelevant for the purposes of the show

but I found about 37 in Greenville

County for the past year that had

referenced appraisals in their listing

now some of these put the appraisal in

the listing itself or put the amount of

the appraisal in the listing especially

if it was a home that was listed for

less than it was appraised for right

that's a good selling point you say hey

this home appraised for 400,000 but

we're list l in it for

350,000 well that's a a good way to

Market a house others simply said

that the listing was priced based on the

appraisal you know they would use some

kind of a langu some kind of language

like that but without any more

details I would say again because it's

great to be able to Market a property is

being listed below the appraised value I

think it's safe to assume that those

that wouldn't say what the apprais value

was and just said that it was price

based on the appraisal that it was

either priced at or above what the

appraise value was I think that it's

pretty safe to say that and then

there were a a handful of of listings

that were clear were listed they

included the appraisal or whatever but

still listed it above what the appraised

what the appraised value was those

were not very many here's what I did

I went ahead and took this data and

analyzed it in a variety of ways and I

had chat gbt you guys know that I I use

chat

GPT I wouldn't say on a daily basis but

for sure on a multiple times per week

basis I decided to have chat GPT

create a neat little graphic for me

which I'm going to share with you guys

if you're watching on YouTube and if

you're not watching on YouTube that's

okay if you're just listening I'm

going to explain everything to you guys

anyway all right so on YouTube I have

the graphic the graphic pulled up

chat GPT called it appraised listing

analysis which is great and so we're

going to there's nine different bar

graphs on here and I'm going to stop at

the I'm going to start with the top

right corner and just kind of go through

this let's start with the total number

of properties right I already said there

were 37 properties total how did this

break down two of them listed their home

for above what it was above what it

was appraised for of them were unknown

those are the ones that I'm going to

assume was either right at the

apprais value is what they were listed

for or they were probably listed for

slightly above what the apprais value

was and then 25 of the 37 listed the

home below the apprais value that they

had So conventionally speaking people

typically at least you know 2third of

of these are listing if they have an

appraisal they're listing it below the

appraisal value and generally speaking I

think that's a good strategy right

because again if you're trying to

Market a home and you have an

appraisal if you're going to Market that

you have the appraisal there needs to be

something that you're that you're

making attractive to the buyer right a

buyer doesn't want to buy a house for

more than it's appraised for nobody

wants to do that it feels like

overspending and so generally

speaking it's a good idea if you have

that appraisal you you probably need to

price it at least a little bit below

that amount and for sure you

don't want to price it above the appraised

value if you're going to reference that

you got an appraisal recently I would

say if I had a client excuse me if I

have a client that gets an appraisal

on a house and they want to list it

above the apprais value I'm going to

show them data on why that's a bad idea

but for sure when we Market the property

if we do list it for above the appraise

value I am for sure not going to

reference the appraisal in the listing

because it's self-defeating right at

some point the question is going to come

in from an agent well what did it

appraise for well a little bit more than

what we listed it for but my you know

but you know it maybe a different

appraisal will come in better that's

just very weak people don't like that

and and and I don't think that that's

a particularly good marketing strategy I

know that's not a good marketing

strategy all right next next on

here I want to look at so we know which

properties how many of the properties

listed for above or below or unknown

in relation to the apprais value so what

was the average or or in this case the

median of how high or low they listed it

well for the two that listed for above

the apprais value the median was it was

$20,000 above the apprais value

obviously the unknowns are unknown

for the 25 that listed below the apprais

value the median was

8,500 below the apprais value so if

you're looking on YouTube the the

graph is a little bit awkward because

it's got the higher number on the bottom

and the lower number at the top but

that's because the belows were

were the the greater number out of

these so most of the people that were

that we had the data on that were

listing their homes below the apprais

value based on the median they were

listing it about 8500 below what the

appraisal came in

at let's look at the the percent

average list price reduction so what

I mean by this and I also have the

medi for this this is for these homes

right for these three categories homes

that were listed above the appraised

value unknown which is probably slightly

above the appraised value or maybe right

at or below the appraised value did they

have to reduce their price on average

and by how much okay and so the home

homes that listed for above the apprais

value on average they had to reduce

their price by

5.4% over the course of their listing

for those that are in the unknown

category so probably slightly above they

had to reduce their price over the

course of their listing by

3.15% and for those that were below the

median on average they had to reduce the

price at some point by

2.8% let's look at the median real

quick here the same number but just the

median instead of the average the

the median was exactly the same again we

only had two properties so that makes

sense for those that listed their home

above the appraise value

5.04% and then the unknowns were 1.27%

price reduction on median for those

that were probably at or slightly above

the appraise value and those that were

below the apprais value had reduced

their price on median very marginally

only by 75% so what does this say we've

got very clear steps so far the four

charts we've looked at four graphs we've

looked at steps going up and now

steps going down

basically the conclusion that you can

draw from this is you can't fool the

market right the market and and a good

appraisal is reflecting the market in in

some way or another you can't fool

the market right if you overprice a home

the the market is going to figure that

out and as a result home the homes that

were priced above the appraisal by

average or median they had to reduce the

price by 5% and the the lower the list

price was in comparison to the apprais

value the less of a price reduction had

to

happen and so like I said the median

price reduction for those that listed

below the appraised value was less than

1% which is great because right now

I'm I I'm not sure if I'm going to do a

show on this I'm thinking about it

but right now there are of there are

some records being set on price

reductions records being set on

contracts falling through there's a lot

happening right now in that regard so

you really it's it it's really helpful

to know okay those that are taking the

appraise the appraisal into

consideration and listing it on average

8,500 below the appraised value they're

not having to reduce the price to the

extent that all of the others are having

to do let's look at the fifth

grade

graph here and this is looking at all

these properties and how many of them

sold or are currently under contract

right I can't extrapolate whether these

will all sell if they're under contract

but we can at least look at the data so

of the ones that that listed above

the appraised value again it was only

two of them one of them never sold and

the other one did so 50% of those that

were in the unknown category so probably

slightly above the the appraised value

60% of those sold are went under

contract and for those that listed below

the appraised value

84% sold or are currently under

contract and so again we're seeing

it's just very distinctive very striking

step patterns and I didn't manipulate

this data I let I always let the data

say what it says and if there are any

surprises that come out of the data

you guys that are that are frequent

listeners of the show you know that that

I'm willing to admit if there's a

surprise in the data happy to admit that

and the there's just there's no

surpris in this data it's exactly what

you would expect it to to be let's

look at the percent of property sold at

or above list price okay so if you

listed for

300,000 did it sell for 300 or more

or did it sell for less than 300 the

above and unknown categories so those

that did not price their homes below the

aisal 0% of them sold at or above list

price that is a really and and by the

way the original list price not the not

the reduced list price striking number

not a single one of the 12 homes that

that listed at or above the apprais

value ended up selling at or above the

list price again you can't fool the

market on the flip side those that were

priced below the apprais value 43.7

5% of them sold at or above list price

so again what strategy do you want to

use do you want to have a strategy that

involves price reductions and then

eventually selling below list price by

quite a bit or do you want to have a

strategy that where you might actually

sell at above list price and odds are

you'll probably end up getting more than

going the other direction let's look

at average days on market for the homes

that sold above

or or the homes that were listed

above list price or above man I'm

struggling today guys I'm sorry the

homes that sold or that listed I'm going

to get through this at some point the

homes that listed above the appraised

value on average their days on Market

was

122.5 the next category the unknowns the

likely slightly above or or at list

price average days on Market by the way

which is the time between when it's

listed when it goes under contract 85.9

days and for the homes that were listed

below the apprais value 59.96 days so

again very straight line number if you

you know the graph just is just a

step pattern if you want to sell

quickly it's very simple you've got to

list it below the apprais value if

you've got an appraisal in hand very

simple what about the average price

difference and the this is the

final graphic that I'm going to be

looking at you see this on YouTube If if

you're watching but this is the final

one I'm going to be looking at here the

average price difference from list to

sold okay so look at if if if it

listed for 300,000 and sold for

280,000 the number would be minus 20,000

would be the average would be the the

difference between list price to sold

so on average those that were in the

that listed above the apprais value sold

for $30,000 less than what it was listed

for those in the unknown slightly

probably slightly above the apprais

value category sold for $

17,23 less than what it was listed for

originally and those in the those

that had priced below the apprais

value sold for on average only

$816 less than than the list price

and I did factor in seller concessions

into all of these numbers by the way so

I factored in whether whether sellers

were pay a portion of buyer closing

costs or or offering some other

concession in one way shape or form into

all of these numbers just to make it

a true Apples to Apples sort of number

so long story short as I've already said

multiple times you cannot fool the

market the the market knows the

market knows if you have overpriced a

home or not it's not going to be fooled

it's not going to be Hoodwinked and and

here's what happens if you overprice

your home then and this is just another

way of looking at it it's going to take

longer you're going to have to reduce

your price you're going to be less

likely to sell and you're going to be at

risk of selling for less than had you

simply priced it appropriately or even

perhaps a little bit less than than

what it's worth from the get-go and

so again this is to me as a realtor I

get paid a percent based on a percent

of the sold price I want all of my

listings to sell you know I would like

them all to sell for Millions upon

Millions right but my strategy of how

I price a home it it can sometimes be

nonintuitive to the general populace

because they think well we need to price

it as high as possible to get the most

value but that's not how this works

because there are other Dynamics going

on where people are are looking at

these homes and and if they see a home

that appears overpriced they're not

going to look at it they're not they're

just going to ignore it they're just

going to wait then the listing stays on

the market for a long time and then

price reductions happen and then it gets

stale and then people start to think oh

well here's an opportunity I could just

make a lowball offer and then after

it's all said and done you end up

being way worse off than had you just

priced it right from the get-go so

here's my plee to you guys whether you

use me as your realtor or not please

price it right from the get-go use a

realtor that is going to be honest with

you about what your home is worth let me

tell you it is very awkward for me as

a realtor when I'm talking to a

prospective seller that overvalues their

home because here I am I've got data on

my side and I'm like your home isn't

worth 500,000 it's worth

450,000 and they're insistent they're

like no it's got to be worth 500,000 and

their data is non-existent it's based on

Vibes and and those can be very

awkward conversations I hate having

those conversations but I'm never

going to put you know avoidance of an

awkward confrontation above telling my

client or prospective client what is in

their best interest and generally

speaking what is in your best interest

is to make sure that you don't overprice

your listing because you'll end up

making less money and having more

heartache in the long run that's all

I've got for today's episode thank you

guys so much for listening my contact

information is in the show notes if you

need a realtor that will price your home

correctly Piper Insurance Group also

their contact information is in the show

notes if you need a home Auto or

Umbrella insurance company in South

north or South Carolina North

Carolina or Georgia and please if

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