S2 EP26: The Dangerous Assumption Behind “It Appraised”

In this honest, no-filter episode, Brittney dives into a common — and potentially dangerous — mindset in real estate: assuming that if a home appraises, everything is “good to go.”

Spoiler alert… it’s not. 😬

She breaks down the critical difference between appraisals and inspections, why relying on appraisal results alone can lead to unsafe decisions, and how this misconception is showing up in real-life transactions — especially in North Carolina.

If you’re a buyer, seller, or agent, this episode will challenge the way you think about negotiations, repairs, and what it really means to make a smart, informed decision in real estate.

🔑 Key Takeaways

• An appraisal ≠ a guarantee that a home is safe
 • Appraisals focus on value and loan requirements — not full property condition
 • Inspections provide a deeper, more complete view of a home’s safety
 • Using appraisal results to avoid repairs is a flawed (and risky) mindset
 • Due diligence practices vary by state — and can introduce risk if misunderstood
 • Agents have a responsibility to educate, not oversimplify
 • Not all repair requests are equal — prioritize what truly matters
 • Clear communication and ethical decision-making build trust and better outcomes

⏱️ Timestamps

00:00 – Intro + Soapbox moment
 01:00 – Due diligence vs earnest money explained
 02:30 – Risks of sending money directly to sellers
 04:30 – The real issue: appraisal vs repairs
 06:00 – What appraisers actually look for (and what they don’t)
 08:00 – Why “it appraised” doesn’t mean safe
 10:00 – Negotiation pitfalls + appraisal leverage
 12:30 – Real-life scenario breakdown
 15:00 – How to guide clients (buyers & sellers)
 17:00 – Final thoughts: ethics, responsibility & doing the right thing

Closing Chapters Podcast: Where Every Mission Has A Story

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Disclaimer: This podcast education only & is not legal, tax, or financial advice. Talk with your own pros about your situation. Opinions are my own.

© 2025 Brittney Frye. All rights reserved. Realtor, license # 352197 in NC. Brokerage: RE/MAX Southern Properties. 

Transcript

SPEAKER_00 0:00

Hey, hey, friends, welcome back. Today is like a soapbox episode, let's be honest. I really want to impress something that I feel is super important. And honestly, this is not something that I found to be a big to-do until I got licensed in North Carolina. So every state tends to have their things that they're more strict on or cling to. And this is one of those items where I'm like, I don't understand in the grand scheme of the transaction. Explain it to me. Why does this thought process make sense? So yeah, let's dive into it. I've already told you guys how I feel about this due diligence money stuff in North Carolina. So if you don't remember, in North Carolina, when we get under contract, we have due diligence money and earnest money. And most of the time, they care about the due diligence money here more than the earnest money. The earnest money is treated in the same fashion as most other areas where it gets put into a trust account, usually with the brokerage or the closing attorney, until closing and is added to the transaction at that point or refunded to the transaction at that point. The due diligence money in other states, the way that I have seen this is that if you put in the contract, if I want to get out of the contract, I owe you X. So if I send over a termination, this is how it is in South Carolina. If I turn send over a termination agreement, then I have to send over that check for the agreed upon amount at the time that I'm requesting to terminate. It is not done up front. In North Carolina, however, it is done up front. It is a part of the original offer. And a lot of times people prefer that bucket because it's completely non-refundable versus earnest money, right? It has some other things to it. And the big like ticket item with this that I don't love is that this money goes directly to the seller. Like literally pull out your phone, send it via Venmo Zell Cash App to the seller or check or cash. Okay. We live in a world where fraud is crazy. And that is something that we are like pounded into all the time. And we have to tell our clients all the time be very careful with wiring instructions. Always double check with where it's coming from. If you are curious or have any reserves, you go through me first. I should be telling you when it's time to wire money. Don't go off with some random, right? On and on and on and on. And we explain how, like, whenever we get the earnest money that it's sitting in a trust account and that it's not in anybody's hands. It's like a neutral third party, so to speak. So to try to tell somebody, like, yes, oh, by the way, you are now going to give money straight to the seller. Also, by the way, typically in a transaction, we don't have the parties directly communicating. So, in order to do this, a lot of times we're having to give phone numbers to each other, email addresses to each other, all of these things to show each other's personal information. And it like eliminates an like that barrier of let it be agent-to-agent communication, right? I understand everybody's information is public. You can pretty much find everything anywhere you go, but most people are not going to take the time to do that unless there's like a problem or an issue. But like when we just hand over information, it just opens up a whole new can of worms. So also, I don't like it because it's there's no accountability. But outside of the no accountability and it going into the seller's hands, it still has to be verified by the lender, just like earnest money. So earnest money, it needs to come out of the buyer's account. The lender needs to check and be able to see where it came out of their account. So how does that work? How does that work when we're sending it via Zell and Venmo? It is not going to like some secured location where we can verify it. Who knows if it's coming directly out of their checking account at that point? If it's cash, how are you tracking that? Are they supposed to go pull out the exact amount of cash? I don't know. There's just all kinds of things. So I don't love that piece of the North Carolina contract. I just think that there's a lot of things that put big old question marks on there. Now, the other thing, this is what I really wanted to talk about. That's more recent, not more recent, but just recently happened again. Is there is this notion in North Carolina that these agents are so hard up on before they will negotiate repairs or extra items in a contract, they want to know that the appraisal does not have any lender required repairs. Now, I can understand the value of making sure the appraisal is good. And if there are lender required approval like repairs, putting that into the full scope, right? I get that. However, that should not dictate what's being requested of you, right? If there's a lender required repair, are you gonna do it or are you not? Because at that point, you are the are the reason this contract's gonna fall apart. But basically what it comes down to is they're saying, but if there's a lender required repair, maybe I'll do that, but I'm not gonna do these other repairs for you. Let me tell you something, friends. An appraisal is a very, I don't want to say this in like a disrespectful way. It's like a checklist item, right? There are different checklists requirements for each type of loan. Okay. So an appraiser goes through and they check those items. And if there happens to be something wrong with one of those items, then they will call it out. Okay. Now, an appraiser does not take off an electrical panel box and look at all the wiring and make sure it is safe and sound. An appraiser does not put the like the plug detector in to see if we have grounds, if there's a neutral, like if we're polarized, if it's flip-flopped, if the GFCI is tripping, right? An appraiser does not look under the house to see if pipes are rusting out. Those are not the appraiser's job. Okay. So just because there is something on an appraisal or not, literally does not mean the house is safe and good to go. And that is where we get crisscrossed, right? So the the most recent conversation that I had with this was is there any lender required repairs on the appraisal? And I'm like, no, she refused to negotiate until I told her that. And then once I told her that, she refused to negotiate because she thought it should be good to go. That is not the case. And I'm so irritated about this particular situation because the agent was the owner. Okay. And when that is the case, I truly believe that if we are going to do business in this world, like if we're going to be investors, if we're going to buy a property and flip it and put it back on the market, that we should be held to an even higher standard because we know what right looks like. We know how to get a house pre-inspected. We know what a red flag is. Not has sent you that report and you know that there's a safety concern on it, then really? Really? Well, there's galvanized pipes and we paid to have it scoped and can prove and verify to you that there's problems with it. Yet you're just gonna say, I don't think I can do all that. Appraisals are meant for value and to cover the loan requirements. Inspections are a bird's eye view on the whole entire property. Okay. If I had to choose, I understand that the appraisal stuff has to happen, right? But let's be honest, they don't know what makes the house safe or not, or that is not what they are looking for. So how dare you say, I'm just gonna ignore the safety stuff because the appraiser says the house is fine. It meant value, there's no required repairs. Just because an appraisal is good does not mean the house is safe. It just doesn't. And agents, we are passing along this message to our clients. And I know this because it was the same exact thing whenever we purchased our first house here in North Carolina. We had the opportunity to adjust our closing cost like amount and had asked for a couple of repairs. They would not answer us until we knew that there were no appraisal requirements and that the appraisal had come in. Now, let me tell you from my perspective, I don't owe you a darn thing. Right? That appraisal is mine as the buyer. I paid for it through the lender. Okay. It was a requirement of mine, and as long as it meets the requirement, then we are fine. However, I should not have to disclose to you what is in that appraisal unless it applies to you. So my concern in this situation, right? Back in this first situation, was all right, the house appraised well and my client wants to add extra to their closing cost coverage. Basically, we have a buffer zone, we can get a higher loan amount, so let's have less cash to close. That's reasonable. Now, just because the house appraised for more than what we were under contract for, the seller, that's not the seller's information to have. Okay. So in that scenario, whenever the buyer's agent goes back to the seller's agent and says, hey, seller's agent, yeah, the appraisal came in and it's good. Oh, by the way, we want X amount more in closing cost coverage. That's a red flag. To me, that would be a red flag. If I were a listing agent, I'd be like, Hold up. We, if I were not even the listing agent, if I were the seller. And I've heard so many stories about this where people get to the closing table and sellers find out how much their house appraised for and they were like, oh no. And they will walk away from a closing table and won't close because they feel like they they got gypped, that they left money on the table. Now, that's a whole nother conversation for another day. There's so many reasons to sell, and it doesn't always mean that everything has to mix match perfectly. And ultimately, realtors give a price range. It is the seller's decision where they want to list that. And also the market tells the value, right? So just because an appraiser finds the value doesn't mean the market truly is showing that at that moment. Like the market is like what a buyer is willing to pay for your house at that given time. So you go by the information that you've got, right? But either way, what I was saying is like in the scenario like that, if I'm a seller and all of a sudden my buyer is asking for more and concessions and raising the sales price, then I might be willing to say, yeah, as long as it appraises. But if it does not appraise for this higher value, then we take it away. Okay. Fair enough. If that were the case, fair enough. But if I turn around and say, hey, Mr. Seller, the house is already appraised and now the buyer wants more money and wants to increase the sales price, right? Still has no bearing on him, honestly, like on the seller, right? Because we're just equaling it out. We're we're raising the sales price and raising the concessions the same amount. However, that gives Mr. Seller an opportunity to be like, what? My house appraised for more and we were under contract for less. No, thank you. I'm canceling this offer. Not cool. So it's the same thing whenever we go into this whole tit-for-tat thing about the appraisal and the repairs. If I go to my seller and say, hey, Mr. Seller, these items are not safe, right? From this inspection report, we need to address it. But then they go, but did the house appraise, are there any required repairs on the appraisal? And I go, no, Mr. Seller, they're not. And then Mr. Seller goes, but why do I need to do anything else? They can get the loan. I don't need to do anything else. They can take it or leave it. Now, is that right? Is that reasonable? Should we be passing over a house that is unsafe and has repairs that are necessary? That's probably because of an error on our part. No, absolutely not. So this whole conversation that the appraisal and the repairs or the repay the appraisal and the terms need to be all combined in one conversation. No. And everything is negotiable. It doesn't mean that we go back and say, let's talk about the concessions. Once again, it doesn't mean that we don't put in there, hey, if it doesn't appraise, then this goes away. That's fair. That's fair to say, I'm taking a chance, sure. You want to raise the price and get a little bit more coverage in there and baby basically build it into your lung, take your chance. But if it doesn't appraise, I'm taking it away. That's fair. But whenever we start making judgment calls and get personal about it because we think it should just be good to go because the appraiser said so, that's not cool. And this is one of those things where as agents we need to educate and let our clients make an empowered decision, right? And that education is not, well, if the appraisal says it's good, then the house is good. The appraisal means the value is there. The appraisal means yes, the buyer can get a loan. That doesn't mean the buyer should buy the house if it is not safe. That doesn't mean the buyer should accept something just because they can get a loan for it. Right? We can all get loans to help pay for whatever at 20, 30, whatever percent. Is that a wise decision? Nah. Absolutely not, right? We could buy a car with a salvage title just fine. Should we do it? Maybe if they can prove that everything was fixed and it's okay. But if they can't, or I see a wheel hanging off, should I do that? No, it's a red flag. Okay. And we need to be able to tell our sellers just the same. I do this all the time with my buy, like both sides of the table. I will tell my buyers, all right, I'm gonna put on my listing agent hat for a second and talk to you as if I was representing a seller. This is the type of conversation I would be having, and this is what I would be considering. How do you feel about that? And that puts it into perspective so that they get to make a good decision that they're comfortable with. And the same thing on the seller side. I'm gonna say, look, if I were the buyer, this would scare me. The way that the inspector has this in here, or look at all the things that were on there, and this is all that they're asking for. I think they did a great job of actually this the term I've been using a lot. I don't know. My my husband's terminology keeps sneaking in on me and my business. I'm like, they've done a great job racking and stacking. Like this is our whole thing. When we get an inspection report back, we rack and stack. We're gonna prioritize by what is safety or harmful to the house that is a huge issue. And then if there's something that you just care about more, then that's okay too, to ask for that. There's a lot of times where there's things where they're like, Brittany, but what about this? What about that? All these things. And I'm like, that's up to you. Like personally, that's not something that I would get like caught up in. It wouldn't really bother me. But this isn't my house, right? So like you have to be comfortable with whatever you're doing going forward. So if it bothers you, then my job is to support that and move forward with it, not to minimize it. But yeah, and on the selling side again, once again, sometimes a buyer just needs to be feel like they need to feel like they've been seen and heard and that they are being taken care of. Okay. And I have had so many times where we get repair requests that it's like a broken toilet seat, has a crack in it, or things like that. And my seller is, dude, it's five bucks at Walmart. Go pick out your own. And I'm like, yeah, I get you. But it is five bucks at Walmart and it's gonna take you five minutes to switch out. Is it worth it if it makes the buyer feel good and we're in good shape? Yeah, absolutely. That's an easy kill, right? So sometimes we need to recognize that like we can pick and choose our battles as well. But all in all to say, please, please, please help your clients make really good, educated, informed decisions and do not cloud their judgment. Do not say, just because the loan is good, we shouldn't have to do anything else on this property. That's not true. And you know it. If you were the buyer and you were in their shoes and something was not safe, you would not feel good about it. And it's our job to convey that and express where these red flags are and allow them to make a decision, not to shove it under the table, not to say, if this is this, then you know, do what you want to do. Like you don't have to do that. They can either take it or leave it. No. Do the right thing, be good people, make the world better. Also, these are the moments that matter the most when people look at realtors and have a really good experience or a good reputation versus what are we good for? This is like one of those moments where we get to stand out and shine and just express that we want to do the right things and we want the house to be safe and sound all the way across the board. And same thing on the buyer side. Like we want to be reasonable. We don't need to ask for the star in the sky and the moon. However, we need to identify what truly is important and be able to show that we are not being unreasonable, that there is more that was on the report, and that we do understand we have our own responsibility just to maintain the house and take care of the little things. And that's okay as well. What are your thoughts? Am I crazy? Or do I have some validity here? And I am a special kind of crazy, by the way, but I feel like it's for the good. So let me just clear that up right now. Anyhow, I would love your support. If you enjoyed this, if you like this type of information and seeing like the different sides, like the post and share with somebody. And if you want to subscribe to my channel, that would be so amazing. But yeah, just let's keep putting goodness into the world. I hope you guys have a great day, and I'll talk to you very soon.