Home Buying in 32258>Question Details

Meghan Donoh…, Both Buyer and Seller in 19083

FHA Appreaised our house that we bought for LESS than what we offered.How common is it that the appraiser will reconsider if more info is given??

Asked by Meghan Donohue, 19083 Fri May 13, 2011

The selling agent offered to appeal based on other comps. We TRULY believe the house we want to buy is worth what we are willing to pay. Do we have a snowballs chance in hell of getting him to reconsider his appraisal?

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Answers

16
Hi Meghan,
Unless the appraiser has made some errors on the appraisal, or is not geographically competent (meaning out of the area and doesn't really know the neighborhoods), there is no real formal process to appeal an appraisal. You may order another appraisal and hope that the value is higher.

What concerns me about some appraisals today is that some appraisers do not give any value to the upgrades in a home. They will appraise a dinged up short sale or worse, foreclosure, right along with a true third-party sale. While there are a few rare appraisers who refuse to use short sales or foreclosures, most do. No doubt the banks are pressuring them to do so, because they want recent sales and sales in the neighborhood.

Meghan, you and your agent should go over that appraisal with a fine toothed comb to be sure it is accurate. And do verify that the appraiser is from the area, not traveling 100 miles to do the appraisal. Sometimes the square footage is wrong, etc.

If you think this has been helpful, please give us a 'thumbs up.' Sorry this has happened to you. It is very common these days.

Best regards,

Sharon

Frank & Sharon Alters
Team Alters
Coldwell Banker Vanguard Realty
904-673-2308
sharon@teamalters.com
Web Reference: http://teamalters.com
2 votes Thank Flag Link Fri May 13, 2011
I am a real estate appraiser and a REMAX Realtor and you can ask for a reconsideration of value. Your agent needs to send the lender the comps that they think are better comps and justify why they are better comps. The idea of the appraiser not knowing the area is crap, it is a USPAP violation to work in an area that you are not fimilar with. The buyers are emotionally attached to the home now and the Realtor is looking at the commision on the sale, thats why the appraiser is unbiased. I hope this helps, feel free to call me 904-962-8089 with any questions.
Donald Price USN-RET
CDPE
REMAX Specialists
ST. CERT RES. REA. RD3933
1 vote Thank Flag Link Fri May 27, 2011
Gregorio found your answer! Pay a higher interest rate and get a rebate from the lender to pay your closing costs if you love, love, the house and the seller will not agree to contribute to your closing costs at a $535k sale price.

Good luck and make sure to contact your lender to find out how high your interest rate needs to be increased to get the $15k closing costs. With rates so low nowadays, you will still end up with a terrific interest rate.
1 vote Thank Flag Link Mon May 16, 2011
Hi Meghan,

There are some really good answers here. I have to agree with the mortgage broker who can't understand why you as the buyer would want to pay a higher price for a home that you believe is worth more. By your wanting a higher price you will pay a higher mortgage payment, MIP (if applicable), home owner's insurance and taxes. Seems like your in a great situation with a lower appraised value on a home that you believe is worth more. Especially when we are all trying to save money today.
Charlie
Charlie Chorman - REALTOR
Coldwell Banker Vanguard Realty
904-571-1358
yourrealtor@att.net
Web Reference: http://jaxhomesinfo.com
1 vote Thank Flag Link Sat May 14, 2011
Yes you do. Appraising is not a science, it is an art form. Appraisals on a piece of property will vary with the individual. If you are paying cash for a property in N.E. Florida, the standard contract does not even require that you get an appraisal. I recently had a case where the an appraisal was required and the appraiser came in with a value that was over 30% under what my comparative market value analysis showed what the house was worth. The appraiser was not the least bit familiar with the area in which the house was located. We were successful in getting the appraiser to revise his opinion by this 30% by showing that the comparables he used bore no rational relationship to the house in question. The Lender then sent out a second appraiser whose appraisal split the difference between the original appraisal and my comparative market analysis. The first sentence in this new appraisal said that the new appraiser had consulted with an expert in the market area. We successfully argued that this new appraiser was not familiar with the area either and were successful. In the end the lender agreed with my market analysis and agreed to make the loan. In any of these situations where an appraisal is required it is important to remember that the purpose of the appraisal is to protect the lender. So long as there is a sufficient down payment (equity in the property on which the lender is making the loan) the lender should feel comfortable in making the loan. If not, look for a new lender. The confusion these days seems to arise from the fact that there is an opinion floating around that a house cannot be purchased if the appraisal does not match the purchase price. This may be an appropriate yardstick or rule to use if you are strictly purchasing a house for an investment. But it is not necessarily a good rule if a house is more than an investment to you, i.e. you feel that this house has qualities which you love which an appraisal will not take into account.

Hope this helps.
1 vote Thank Flag Link Sat May 14, 2011
Meaghan,

You can attempt to have the appraisal re-evaluated, however, if you are working with an FHA or VA loan, the loan amount will only be based on the appraisal, and the FHA appraisal "sticks" to the property for a 6 month period. This means that any other FHA appraisal on the property will not be able to vary by a significant amount. In our Purchase & Sale agreements, there is a paragraph that states the property must appraise at or above purchase price, which protects you as a buyer from over-paying for a property.

Your agent should be working with the selling agent to get the seller to reduce the purchase price to the appraisal amount. This would make the most sense in this scenario, unless there are some other factors I'm not aware of.

If you are not working with an agent, then you need to communicate to the listing agent that you are only willing to pay what the property appraised for, regardless of how much you want this particular house - we have some many homes for sale you can find one in your target area that will appraise.

Good luck - let us know how it turns out.

Carol Zingone
Broker Associate
Prudential Network Realty
904/993-9048
Web Reference: http://carolzingone.com
1 vote Thank Flag Link Sat May 14, 2011
Hi Meghan,

FHA appraisals seem to have this 'problem' lately. I have had a couple FHA appraisals come in way low compared to the Comparative Market Analysis' done both by myself and the buyers agents.

In the first instance, the buyers agent and I paid to have a different FHA appraiser do an appraisal and the new appraisal came in where it needed to. However, the first (original) FHA appraiser would not change his value (even after seeing the 2nd appraisal). Since it was a FHA appraisal, the first/original appraiser has to change his/her value and if he/she doesn't, the appraisal stays with the property for 6 months for all future FHA loans. The buyer can pay the difference between appraised value and offer, the seller can lower their price, the buyer and seller can meet somewhere inbetween, or contract can be cancelled. In this deal that I'm referring to above, the contract was cancelled and the sellers got full price with a buyer doing a conventional loan.

Another instance I had was the FHA appraisal came in low, the buyers agent appealed but the appraiser would not change the value. The seller lowered their price to within $5,000 of the appraised value and the buyer paid the additional $5,000 in cash.

Most likely the appraiser you have won't change their value but it doesn't hurt to ask.

Good luck!

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
1 vote Thank Flag Link Fri May 13, 2011
....Hmm, usually the appraisal will not budge on the value- especially if its within 10% of the comps. These days appraisals are very conservative- for obvious reasons.
1 vote Thank Flag Link Fri May 13, 2011
This sounds more like an accurate appraisal and a bad move on your agents part. It's never a good idea to try to inflate the value of the home to include a seller concession. If your agent believed the value was 535K they had no business making an offer at 550 with the 15K assist. Yes, I know "it's done all the time", but what also happens all the time is exactly what is happening here. The appraisal comes in "low" (low meaning accurate) and the buyer is in a bad spot.

Hopefully you have an appraisal contingency so you can get out if you want to do that. Another suggestion is to consider a slightly higher interest rate and have the lender rebate your closing costs.
0 votes Thank Flag Link Sat May 14, 2011
Thanks again for all your answers!!! however...
I think I am not making myself clear...the seller said their bottom line was 535,000.00. Which is the exact amount of appraisal.
So, you would assume that they would just lower the price of the house to 535K, but of course they are not going to offer the sellers assist of 15K anymore!! We need the cash at settlement, the monthly payment of a mortgage of 535k and 550K is not that much difference. That's why we offered 550K with a sellers assit of 15K, essentially we are getting the house for 535K, again, the appraised amount. So, we do not think we are overpaying at all! But whatever happens, we are going to lose money as the buyer due to this lowered appraisal.(There were so many updates put into this house over the last 3 years the seller needs a certain amount to make up for that) Or worse, lose the house all together because the seller will just decide to not sell his house anymore. The lowered appraisal value does NOT do the buyer any good in this situation!
0 votes Thank Flag Link Sat May 14, 2011
No! But perhaps you should take a real good look at the appraisal for accuracy. If the appraisal proves to be accurate, why would you want to buy a property worth less than what you offered?
Web Reference: http://www.golftobeach.com
0 votes Thank Flag Link Sat May 14, 2011
Nobody mention there is still another option have your mortgage broker your realtor can contribute towards your closing cost,and possibly listing agent can do the same its asking for a lot for different people involved in the transactions.Call me I can explain have done several to save transaction 904-566-2864 or email me marccameron7@yahoo.com
0 votes Thank Flag Link Sat May 14, 2011
Hi Again Meghan,

Where is your agent during all of this? What does your contract say? What happens to the "seller's assist" should the house not appraise for the asking price? If the "$535,000" is their bottom line to move does it include the "$15,000" seller assist? Are there any contingencies to the seller's assist in your contract? What is the amount owed on their current mortgage? How much will they walk away with at the appraised value? Will this appraised value create a short sale for them? In today's economy with home prices continuing to decline your agent should have realized the potential decline from the listing date and the offer date.

There are just to many questions. The probability of having the appraisal redone at a higher price isn't realistic. You and your agent should be negotiating with the lisiting agent and seller to achieve your goal. Unless the seller wants the home to stay on the market longer he can reject your offer and the reduced price. With the the appraisal the seller now knows the value of his home is. It wouldn't be unrealistic to have the seller agree to the price and seller's assist. You never know until you ask.

Hope that this helps a bit.
Charlie
Charlie Chorman - REALTOR
Coldwell Banker Vanguard Realty
Web Reference: http://jaxhomesinfo.com
0 votes Thank Flag Link Sat May 14, 2011
Hi Everyone! THANK YOU all for your answer! Keep em coming! I really need help!

Just a little background. First off, of course, we LOVE the house. We are totally attached already (I know, a mistake) the location is the best we've seen in the 30+ houses we toured. I looked at the comps he used, and they aren't even good comparables! He compared wtih homes that have less bedrooms, no finished basement, not as good of a location, etc.
Sounds like a good thing that we would pay less. however, here's the deal. we bought for a certain amount (I will make up figures here).
bought for $550,000
with a $ 15,000 sellers assist. (we need that sellers assist due to the fact that we have zero cash since our own house didn't make us any money)
Appraised for 535,000.00
The sellers told us when the negotiating process went on that thier "bottom line" to move was $535,000.00. Here is our fear:
If they lower their purchase price to appriased price, they wont offer their sellers assist anymore and we will somehow have to come up with $15K or whatever for closing which we DONT have.Costing us more money.
If we meet in the middle, we are out more money again.
If we walk away, we will be devastated, find a less desirable house and the sellers assist wont be an option again.

The town we are buying in is a town I am VERY familiar with (grew up in) and honestly, this is the only house we loved and is the best for us, the location just cannot be beat. We are fine with the mortgage and were thrilled with the sellers assist, doubtful we wil find a houe with the location, upgrades it has, 4 bedrooms, etc and the sellers assit. Believe me, we've been looking and only have 38 daysto figure this all out!.
0 votes Thank Flag Link Sat May 14, 2011
FHA Appraisers in this area are difficult to deal with. If other comps are not accepted than there are (4) recourses:

(1) Seller sells you home at the appraised price

(2) Seller and Buyer agree to meet somewhere in the middle

(3) Buyer pays the difference in appraised price out of their pocket

(4) Deal is dormant and and contract is null and void


Wish you well!!
0 votes Thank Flag Link Sat May 14, 2011
Why do you want to raise the amount of the appraisal, you are the buyer... right? If so, this puts you in a strong negotiating position whether you believe the house is worth more or not. An FHA appraisal follows the property so it's not like they can just find another buyer to pay more, they will be stuck with this value so it's in their best interest to renegotiate with you rather than starting all over with a new borrower and the same appraisal. Have your agent attempt to lower the contract price.
Web Reference: http://WeFixRates.Com
0 votes Thank Flag Link Fri May 13, 2011
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