Financing in West Palm Beach>Question Details

Jjsph45, Home Buyer in West Palm Beach, FL

If I dispute the appraisal from my mortgage company b/c it turns out to be too high, will I lose my deposit if I dont close the transaction in time?

Asked by Jjsph45, West Palm Beach, FL Fri Dec 23, 2011

Help the community by answering this question:


Thanks for the clarification, as I am sure you realize you had all of us scratching our heads on your initial request. To respond to your clarification: First, the selling bank in not doing your appraisal; your lender is. And, the lender is going to require an independent appraisal that warrants value of the property. I don't foresee any chance of the selling bank willing to negotiate lowing the purchase price on a property that fully appraised through your lender, then is disputed through a appraiser (who is obviously hand picked by the buyer).

What is your agent saying? What made you second guess your offer in first place? Subsequent conversations with real estate "experts" who are not licensed (Sorry, but i have found that many, many "experts" tend to come out of the woodwork whenever a consumer starts talking about a real estate purchase or mortgage financing. I cannot begin to recount the number of conversations I have had with borrowers after their uncle, neighbor, hair dresser, whoever; gave them their EXPERT opinion about mortgage financing).

I would suggest talking to your agent. The only way to know if you can cancel the transaction is in reading the original contract and knowing the translations from your agent and the selling bank. However, from what you have stated, I suspect you have your challenges.

Please be aware that appraisals are 95% empirical data and 5% pure finesse. I don't know the purchase price of the property; however, the lower the property value, the more likely there could be a 10% to 15% discrepancy. Getting multiple appraisals is somewhat like giving a loan package to three different underwriters: Everyone has an opinion. they may all approve the file; however, the list of conditions will vary from one lender to another. Best of luck
1 vote Thank Flag Link Mon Dec 26, 2011
Yes. (Probably.)

I'm guessing you have a financing contingency in your offer. If so, the mortgage company is saying that the property is worth enough to lend you the money. To oversimplify, it appears you've been approved for financing. If so, then the financing contingency will be removed . . . and so will no longer be there to let you out of the deal. Your Realtor can advise you further.

Just guessing here, but are you concerned that you'll have to borrow more because the appraisal come in for more than you'd offered? Let's say you offered $200,000 and the appraisal came back at $225,000. Are you worried that the bank is going to lend you $25,000 more and that that'll raise your payments? If so, that's not the case. (Unless Ann is right.) If you offered $200,000, it doesn't matter whether the appraisal comes back at $200,000, $225,000, $300,000, or $1 million. The bank will only lend you a percent of the purchase price. If you'd planned on putting 20% down, you still would only put $40,000 down and the bank would lend you $160,000. If you're going with an FHA loan at 3.5% down, you'd still only have to put $7,000 down and the bank will lend you the other $193,000. Even if the appraisal is for $1 million.

Hope that helps.
1 vote Thank Flag Link Fri Dec 23, 2011
Don Tepper, Real Estate Pro in Burke, VA
Did you dispute the rate too because it was too low?
1 vote Thank Flag Link Fri Dec 23, 2011
Did you send your lender the lower appraisal? Tell your lender you have "new" information that may be more accurate and they may want to hire a 3rd appraisal (at your expense) to verify. It may be worth your cost of a 3rd appraisal if you think the 1st appraiser was significantly incorrect.

Also if you are dealing with a regular seller (not a short sale or REO) then that seller may not care that your appraisal came in lower and will simply sell the house to another buyer.

If the Seller's agent has already contacted your lender to verify your approval (it's her right in the typical florida contract) and you have been approved, you may not only lose your deposit if you fail to close but you may also be compelled to buy. It's called Specific Performance.

Good luck and let us know how it works out for you.

All the best,
0 votes Thank Flag Link Mon Dec 26, 2011
Hmm, the limited character count for my question has not given the correct idea about the problem. The issue is not about having instant equity, but rather the opposite. After bidding on the property I have realized that I am bid over market value, and I expected the bank appraisal to reflect that. However, it simply came back at my bid price, which is at least 10-15% over comps. I had a second (independent) appraisal done which confirmed my fears. Now if I cannot get the bank to lower the appraisal value (and hopefully renegotiate the sale price) I will have to walk...but do not want to lose my deposit. Just trying to figure out what my options are. Thanks for the answers.
0 votes Thank Flag Link Sun Dec 25, 2011
The question is odd, but not completely impossible. On the other hand, I sincerely hope they pull the question on the effectiveness of electronic cigarettes, and have "reported" them to help speed that process.
0 votes Thank Flag Link Sat Dec 24, 2011
I think someone is having a little fun with all of us.

These questions appear on Trulia where people have never asked a question before.

I wouldn't bother answering anymore, I am sure Trulia will pull it.

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0 votes Thank Flag Link Sat Dec 24, 2011
Home Buyer in West Palm Beach,
Please elaborate, what value did you expect, why is the value important and how does this value effect the decisions you must make?

As others have so enthusiastically stated. a high appraised value for a buyer's perspective home is the signal to do the 'happy dance!"
0 votes Thank Flag Link Sat Dec 24, 2011

Nothing I like to celebrate more than an appraisal for any of my clients that comes out higher than the price we worked so hard to negotiate. Please do not dispute an appraisal because it is too high, rejoice my friend, rejoice. It certainly should give you celebration to close and should not cause any delays.

Know that the appraisal process is somewhat of a farce even with all of the government involvement and that appraisals still tend to end up fairly close to the purchase price. So again, if your appraisal was too high rejoice my friend, rejoice. And give your Realtor® a big pat on the back!

I hope this information is helpful but if you need anything additional please do not hesitate to give me a call.

Always at Your Service,

Tom Priester e-PRO
"Results Driven Real Estate"

Keller Williams Realty
561 308-0175
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0 votes Thank Flag Link Sat Dec 24, 2011
Why would you do so? The appraisal will not affect your tax assessment and means you got a good deal. the only true trouble would be if it came in too *low*
0 votes Thank Flag Link Fri Dec 23, 2011
Hard to tell without seeing the contract. If it is subject to appraisal then you are still in the deal.You must have your reasons wanting to get out of the contract. There are usually some other ways to get out and get your deposit back. If you need help I can read your contract to give you better advice.
Anton Seiss
Seiss Real Estate
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0 votes Thank Flag Link Fri Dec 23, 2011
Too high? Why would you want to complain that you probably made money by buying this property?

Dude. Close as fast as you can!
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0 votes Thank Flag Link Fri Dec 23, 2011
The Appraisal your mortgage Co. is ordering is to confirm a value at or above the Contract Price !
If the apraisal value comes in "high" you are in contract at a set price! Your deal is still the same. There
would be no change for you -except the knowlege that you are paying less than the property is worth.
It is in cases of a "low valuation " where the appraisal has an effect on the contract price,
If you are talking about the Sellers Bank valuation in a short Sale you offered a price contingent
on their "approval" if they " disapprove" your offer you're dismissed and not obligated to perform.! Let
me know if there's somthing else you are worried about! Best of Luck
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0 votes Thank Flag Link Fri Dec 23, 2011
If your appraisal came in too high then you should close on your property right away assuming that your inspections came out ok. If you are the buyer, this just means that you now have instant equity in your home. If you are the buyer and your appriasal came in too low then that is a problem that is usually solved by either the buyer paying the difference between the appriasal and purchase price or the seller will have to lower the price to the appriased amount. If your concern about the high appraisal is because you think your insurance will be too high, then dont worry as the insurance will use a different value approach called replacement value which will be way higher than your appraisal (99%of the time) and that is how they get you with the high insurance rates!
0 votes Thank Flag Link Fri Dec 23, 2011
I believe you're under the impression the higher the appraisal the higher your taxes, which isn't true. You want a high appraisal and a low tax tax value. As far as taxing authorities are concerned the assessed value is set for 2011, and when they get around to re-assessing the value for 2012 if they do at all, is going to take the purchase price into account. But for mortgage purposes you want it as high as you can get it. The only other reason would be a sales price that has been pinned to the appraisal of the property, which if that's the reason you should never do it that way anyway.
0 votes Thank Flag Link Fri Dec 23, 2011
Please, please tell us you did not write a contract that the price would increase based on the appraisal.... please?
0 votes Thank Flag Link Fri Dec 23, 2011
Wow, inquiring minds want to know! I have never had anyone be concerned about an appraisal coming in to high...except a seller who was very upset with his listing agent for recommending the list price 20K under value.

You do understand that an increased value on a purchase means instant equity for the buyer, right? The purchase price does not go up with the appraisal at all. Please do explain to us your concerns.
0 votes Thank Flag Link Fri Dec 23, 2011
I'm right there with Anna. Why do you want to dispute a higher value?
0 votes Thank Flag Link Fri Dec 23, 2011
If you are a buyer, not sure why you would want to dispute a high appraisal...what is your agent and or attorney advising...
0 votes Thank Flag Link Fri Dec 23, 2011
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