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.
Century 21 Joe Tekula Realtors
Phone (direct): (973) 584-4235
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!
Unwavering Commitment to Service
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.
Halstead Property, LLC
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?
Gina Chirico, Sales Associate
Prudential NJ Properties
973-992-6363 ext 116 office
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
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