On the surface, it probably looks like old Jim the Realtor really made out nicely. He round-tripped his listing (represented both the sellers and buyers) on Los Robles, and knowing he’s a full service guy, that must have been a six-figure payday!

Not so fast.

We had a major malfunction with the appraiser.

He was a staff appraiser for BofA, which is one of the most conservative places to get a mortgage. He wandered around the house aimlessly, and took 2x as long as a normal appraiser would take.

Our contracted price was in the $2,800,000s, and he appraised it for $2,635,000.

He used five sales that all pointed to a value in the $2,800,000s, plus one other – the house across the street that I sold for $2,150,000 in December. It was 26% smaller and a total gut job, and it had multiple full-price cash offers on it in the first 1-2 days on the market. Clearly it was an under-value sale, especially when my sale on El Arbol one block away that closed for $2,440,000 was also used.

The official appraisal guidelines state that recent sales should be similar in size:

His one bad comp was 26% smaller than the subject property, and was unsimilar in every way. But the other infuriating thing he did was omitting a similar comp that had just closed escrow!

While the allure of representing both sellers and buyers looks appealing when considering the potential commission, it comes with added responsibilities of having to represent the best interests of each party independently. Many agents refuse to do dual agency because they can’t wrap their head around how to accomplish it.

But I’ve done it a lot and it’s simple – when you are speaking to one party, advise them of what’s best for them without divulging anything about the other party. It’s complicated for the agents who can’t stop themselves from verbally vomiting all over everyone they meet, but for the rest of us it is simple.

There is an inherent problem, however. The clients don’t know if they can trust you.

When I brought up to the buyer that the appraisal was flawed and the actual value of the home was much higher, he said, “Help me understand how you are acting in our best interest in this negotiation given the information we have now.”

The sellers weren’t going to sell the house for $2,635,000, so we needed to find some middle ground.

The buyers were willing to come up $70,000, and the sellers came down $75,000.

But there was still a gap.

This went down was when we were in Cusco, Peru having our last dinner together as a family before Natalie went back to work on the Karol G tour. I took the call from the sellers and they expressed their displeasure with everything (when the listing first hit the market, there was a six-hour delay before the photos uploaded – thanks CRMLS; we fumigated the home which killed the goldfish; and while they were all for family vacations, this is a terrible time for us not to be there for them).

When we hung up, the deal was dead.

If there is any hope that a deal can be resuscitated, it needs to happen quickly – within hours. The next morning, I got the buyers to agree to proceed with the purchase if someone else would make up the gap. The sellers said the same thing.

I threw in $70,000, plus paid for the mold repairs.

Donna was incensed and refused to agree. She sent our boss a text to tell him to not do the deal. Compass went along, but refused to take a hit so I had to pay their full fee. Our two daughters – who have had to put up with business getting in the way of family since the beginning – declared that this would be our final vacation together.

Why would I make the deal?

Because I’d have to find another buyer who would shrug off the low appraisal and mold report (the sellers said the readings were within acceptable levels), and pay full price, or close – because all sellers are going to dig in the second time around.

If I got stuck with an unsold listing that needed extra attention, then the two listings I have coming up this month would be impacted too – let alone the other business I’d like to be doing this summer. Plus, Los Robles has the potential of not selling at all.

In the end, nobody is happy, my kids hate me, my wife barely speaks to me, and I did the deal for virtually nothing. Still think this looks easy?

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