Home Buying in 07514>Question Details

Roxy, Home Buyer in 07514

I am interested in buying a condo where the asking price is $189,900. My apprasial came in at $156,000. The condo is fully renovated and is 892 sq

Asked by Roxy, 07514 Thu Feb 18, 2010

ft. Should I continue to pursure this property?

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Hi Roxy,

First of all, make sure the "appraisal" is really an appraisal. Many banks use AVMs (Automated Valuation Models) in lieu of a real appraisal. AVMs can come in anywhere and are not reliable. So verify that your appraisal was bona fide and performed by a licensed appraiser. Get a copy of it. Also make sure it was a full interior appraisal, not a "drive-by".

If it was, than that spread is awfully wide. I would not pay anywhere near $189,900 for a property that was properly appraised for $156,000.

If the comparable sales are showing $156,000, then that is what you should pay. Didn't your agent provide you with the closed sales that were probably also going to be utilized by the appraiser? The comps should lead you to the correct selling price, and it is your buyer's agent's job to provide you with those comps.

Good luck!

Marc Paolella
Relocation Director
Century 21 Joe Tekula Realtors
Phone (direct): (973) 584-4235
Web: http://www.marcpaolella.com
1 vote Thank Flag Link Thu Feb 18, 2010
Hi Roxy, Marc gives you good advice on probing further on the appraisal. but the most important point is that a review of the comps will give you the answer of what the fair price for the home is and guide your offer and negotiations.

A seller can ask whatever they like, and buyers can offer whatever they like. But the comps support the market value discussion and are what the bank appraiser will review to determine value. If the home does in fact under appraise then it could cause issues with the deal, either you put in more money or the seller agrees to negotiate the price.

Talk with your agent about the pricing - this is what we do!

Jeanne Feenick
Unwavering Commitment to Service
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Thu Feb 18, 2010
You definately should pursue the property. Just present your offer with your appraisal. The seller will probably want to get an appraisal of his/her own. But, I wouldn't pay more than appraised value.
Web Reference: http://www.dianeglander.com
0 votes Thank Flag Link Thu Feb 18, 2010
The lender we use at my company just spoke to us yesterday about appraisals coming in low. There's a lot of that here in NYC now. The laws changed and banks have to use the lowest -priced apprasier and often they just don't know the area they are being sent to. Personally, whether I am the seller's agent or buyer's agent I always go to the appraisal with an armful of good comps supporting out price. What our lender said, though, is your agent can appeal a low appraisal by supplying some good comps to the bank and your bank contact can appeal by submitting these. I assume you have an agent, correct? If not and you were not professionally represented, it will be harder, but do your research on consumer sites and submit the comps that justify the price to the bank. The other answers below are assuming the property is only worth what the appraiser said, but I am assuming you had a good agent and you made an offer that was reasonable based on the comps and the appraiser under-appraised it.

Jenet Levy
Halstead Property, LLC
212 381-4268
0 votes Thank Flag Link Thu Feb 18, 2010

You refer to the listing price as $189,000 -- is that the price you agreed to buy the property at based upon your offer? I'll assume since you used the $189,000 number then that's the purchase price as well.....you would have to make up the difference in cash for the asking price minus the appraisal price. By doing so, you may be overpaying for the condo AND starting out with negative equity. If you pay the price of $189,000 and want to sell it - its still only worth $156,000 TODAY to an appraiser. When making your offer did your agent show you the most RECENT SOLD comps. If yes, did your offer support those comps or did you offer or negotiate higher than what the sold comps are? I never advise my buyers to offer more than the sold comps for fear of low appraisals. Again, its only my advice and my buyers are free to offer whatever they want, all I can do is educate them to avoid situations like this one.

What is your agent saying? What is your attorney saying? Were you made aware by your agent that the comps don't support such a sales price and the appraisal may be lower?

Good luck.

Gina Chirico, Sales Associate
Prudential NJ Properties
973-715-1158 cell
973-992-6363 ext 116 office
0 votes Thank Flag Link Thu Feb 18, 2010
Hi Roxy,

If the appraisal came back at $156,000 I would not suggest that you pursue this property. One of the main reasons is that the bank will only loan the appraised amount, therefore you would have to pay cash for the difference.

Please call if you have any further questions
Roxanne Wojdalski
cell 732-910-5835
0 votes Thank Flag Link Thu Feb 18, 2010
I agree. Additionally, if you are getting a mortgage for the property the Lender will only make the loan based on the actual appraised value. So your down payment will be a percentage of the appraised value. You would have to make up the difference between the purchase prices and the actual value if you wanted to buy this property.
There are many propertie on the market you should look for another one. Also, consider how long it will take for the value to reach $189,900. Do you really want a property with negative equity.
All the Best
0 votes Thank Flag Link Thu Feb 18, 2010
If you are a cash buyer and didnt put in an appraisal clause you may be stuck buying. If not let seller know of appraised value and ask them to reduce price to that level. Remember appraisals are opinion of value and another appraiser could come up with a higher number. If you like it enough ask. (also speak with your attorney)
0 votes Thank Flag Link Thu Feb 18, 2010
If you had the property appraised and it came in at $156,000 I would not pursue it at $189,900. I recommend you have your real estate agent negotiate the price based on the appraised value of the property.
0 votes Thank Flag Link Thu Feb 18, 2010
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