Rancho Penasquitos Houses 92129
One of the hottest real estate markets in San Diego, Rancho Penasquitos Houses are in short supply and in high demand! We sold this three bedroom, two bathroom single-story house for $625,000 within a week after putting the house on the market. The house is located on a corner lot in Northwest Rancho Penasquitos, right down the street from the back entrance to Mesa Verde Middle School, and also within walking distance to Deer Canyon Elementary and Westview High, all three top-rated schools in North County San Diego.
The sellers of this Rancho Penasquitos house had purchased the property in 2008 for $550,000. The San Diego real estate market had only recently begun the recession which would last until around 2011. So for several years the value had dropped below the purchase price, but by 2014 home values had recovered in most neighborhoods, especially in this price range in zip code 92129. In the interim, the Sellers had made one major upgrade to the home, installing new dual-paned windows throughout the house.
As experienced Rancho Penasquitos Realtors, we were confident that there would be high demand for this home, and estimated the value at $625,000. Although very few and far between, the recent sales of similar homes in 92129 within the prior six months had been between $575,000 and $600,000. And with the current trend of rising prices, we determined that a price range of $599,000 to $649,000 was the most likely way to fetch the highest market price for the property.
Value Range Pricing Strategty
Why use “value range pricing” when listing a home for sale? Range prices work best in markets where real estate values are rising. The lower end of the price range attracts buyers who are looking in the lower price bracket, which in this case was 3-bedroom homes up to $600,000. If a property is listed above the lower price bracket, say $625,000 in this example, the prospective home buyers who are searching for homes up to $600,000 would not see the property in their Internet search results. Since 99% of San Diego home buyers search for homes on the Internet, pricing only slightly above a lower bracket unnecessarily excludes a large number of home buyers who would otherwise be interested in the property. And most prospective buyers, when finding a home that is only slightly above their “maximum” purchase price, will find a way to come up with the additional down payment or loan amount. In the best case scenario, in the hottest real estate markets, buyers will bid a property all the way up to the top end of the range price. Most homes listed with value range pricing will sell somewhere in the middle of the range.
The Value Range Pricing for this property worked out exactly as planned. A large number of prospective home buyers in Rancho Penasquitos attended the very first Open House. Offers came in, and the highest offer was exactly in the middle of the price range, at $625,000, exactly as the Rancho Penasquitos real estate experts here at SDRealtyPros had predicted!
What To Do About Low Appraisal When Selling
But selling homes in markets where real estate values are rising has one major risk… When home buyers need to get a mortgage loan in order to buy the home, the property must appraise at or above the purchase price in order for the bank to give the loan. Banks hire real estate appraisers to give an opinion of value, and appraisers are under significant pressure from banks these days to make sure that their appraisals are accurate, even unrealistically conservative, in relation to similar recent sales. And that’s what happened with this home. Although the home buyers were willing to pay $625,000 for this home, the bank’s appraiser refused to give an appraisal higher than $605,000.
When an appraisal comes in below the agreed upon Purchase Price, there are four things that can happen: 1) The Buyer can come up with additional down payment money to make up the difference between the appraised value and the purchase price; 2) The Seller can agree to reduce the Purchase Price to the appraised value; 3) The Buyer and Seller can negotiate a combination of the first two possibilities and meet somewhere in the middle; or, 4) The Buyer or Seller can cancel the transaction.
In this case the buyer was unable to bring in any additional money. The seller of this house in Rancho Penasquitos decided that rather than cancel the transaction and look for another buyer, they preferred to reduce the purchase price and conclude the transaction with no further delay. So the Seller agreed to reduce the purchase price to $605,000 and the sale was completed on schedule. The appraiser had acted to the benefit of the bank and the home buyer, to the detriment of the home seller. Our Realtor had provided the best possible comparable sales data and argument on behalf of the Seller, but without any nearby recent sales above $605,000, the appraiser refused to accept the argument that in a neighborhood like Rancho Penasquitos, where supply is low, demand is high, and prices are rising, a higher appraisal is justified. It’s disappointing for the home seller, but the fact is that their Rancho Penasquitos Realtor here at San Diego Realty Pros had successfully used the value range pricing strategy to sell the house for $20,000 more than the appraised value of the property. If the Seller had decided to cancel the sale and let us find another buyer for them, a different appraiser may have seen it our way!