1) Lower the selling price
2) Split the difference (you will need to put up additional cash to cover your half)
3) Cancel the contract.
NY state Associate Broker
Keller Williams Landmark II
They will seldom find 4 houses that are real similar.
The ART to doing a good Appraisal is to find these differences and make allowances for them, to financially make them similar.
One of the factors that they have do deal with, is the proximity:
The PROXIMITY is the one factor that is almost impossible to allow for; what value do you place on one COMP being next door, as opposed to 2-3 miles away?
For this reason, the Appraiser will use a dissimilar house that is 1/4 mile away, rather than a similar house that is 3 miles away. Then, they will make $$ allowances for the differences.
The DISTANCE becomes THE MOST CRITICAL factor in the comparrison.
Imagine what the Appraiser goes through when he is doing an Appraisal in a Rural area, where there have been very few sales in the last year?
They may have to go out further, or they may go further back in time.
They may have to compare a Farm to a Ranch or a SFR.
The Appraisers will find every possible combination over the years, and they still have to do an Appraisal!
I hope I've explained it to your satisfaction.
Good luck and may God bless
The result of an appraisal will largely depend on the instructions the bank imposed on the appraiser when the order is placed. The bank may dictate only homes sold in the past three months or only within the community or within 2 miles. If there are no sale in that community, the appraiser needs to go to 'where ever' the sales occurred, apply value adjustment algorithms, or lapsed time adjustments, reconcile tangible assets, hopefully in like-valued areas.
Highly desirable communities with very low sales activity face this situation all the time. The appraisal WILL COME IN BELOW LISTED OR NEGOTIATED PRICE! The intangible assets of a home that never appear on an appraised value itemized list, and add dramatically to a home value, get left out of the equation when out of community comps are used. My seller and any potential buyers will be made aware of this and adequate instruction will be provided.
It simply will boil down to, what is this house worth to YOU. If the negotiated price and your willing to pay price don't match, then this home is not for you. Based on the 'need to move' motivation of the seller a reduction will come or 'the' buyer who recognizes this home represents real value to them will purchase this house.
Of course, you will and should try to include a 'appraisal contingency' in your purchase offer.
Best of success to you in purchasing your new home.
As a professional Realtor IF that is the case from home owner who we can't educate we decline taking the listing
Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
Home values are generally assesed in the neighborhoods that they are located in. Most banks will follow
those conforming guidlines. I would be glad to help you, find the home that you like in you price range. Please call or email to set up a time to meet.
Best Regards, Richard Luebeck (832)646-2886 or firstname.lastname@example.org