This morning’s print edition of the Daily Herald’s Homes Plus Section includes Jack Guttentag’s column on page two titled, “Unlucky buyer paid more than house worth”. Jack is known as the Mortgage Professor and is a Professor of Finance Emeritus at the Wharton School of Business.
A recent home buyer wrote to Jack, “After being in my house for a year, I learned that the market value is considerably less than the appraised value. I was obviously deceived by the builder and the appraiser. Who do I talk to about that?” Unfortunately, for the home buyer there is no one to talk to. As Jack replied, “There is no law against charging more than something is worth if a buyer is willing to pay it.”
The home buyer’s mistake was relying on the builder and the appraiser working for the builder to determine the value of the home. If the home buyer had used a Realtor, the Realtor could have helped him determine what the home was worth. We Realtors have the best access to comparable sales data and are trained on how to determine a home’s worth. Part of my training for my real estate broker’s license was a course in real estate appraisal.
The key is selecting a Realtor before you start visiting new home developments. A Realtor typically needs to accompany buyers to a first time visit for the builder to agree to compensate the agent, if a purchase is made. You also want a Realtor with you since a Realtor knows what questions to ask and may bring things to your attention that you might not notice. If this unlucky buyer had used a Realtor, he might have avoided overpaying (and thus losing) several thousands of dollars.
ABOUT THE AUTHOR
Fran Bailey shows, previews and tracks downtown Chicago homes for sale giving her the insights needed to help her clients negotiate the best price and terms. Fran has been quoted in numerous Chicago and national publications. To schedule showings of listings regardless of broker or to contact Fran email her at fran.bailey@bairdwarner.com or call 773.793.4516. Learn More
Fran Bailey, Realtor
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I see this a lot with buyers who get suckered into using the builder’s mortgage company in order to get the free granite countertops or whatever other “incentive’ they are offering. Not only did the person buy an over priced home, they also probably got an over priced mortgage as well.
You are correct in pointing out this could have been prevented had they used a realtor and an independent mortgage company who would have brought in their own appraiser.