I have also gone to bat for my clients on a BOA deal where I know for a fact the appraisal was off because 2 of the homes I sold were the exact same as the one my buyer was buying within 1 mile of the home and the same exact thing and sold for the same price we were selling it for. The appraiser they used was from the Tampa area. I had to go to the VP of BOA and wait about 3-4 weeks but I finally got an adjusted appraisal which underwriting did accept.
But again how are you sure the price of $146,000 was justified did your agent show you comps that support the value? I can understand a REaltor and an appraiser being off slightly but not $20k. Hope this helps
Two different perspectives on your situation. As was mentioned, your interests are being fully protected and if the appraisal was properly completed, the bank owning the home should agree to come down to the price appraised of 126K, saving you 20K. Did you have an agent other than the listing agent representing your interests? If so, they should have completed their own analysis or CMA and given you their opinion of what the home you are purchasing was worth. ..
Regarding the mortgage, appraisal industry it is a mess presently, Low ball appraisals are the norm. Many appraisers that are doing work under the new guidelines may be from outside the area and not as knowledgeable about various neighborhoods. Also, the lending banks are subtly pressuring appraisers to use the most conservative data when assessing a property's true value. This is a classic overreaction to the rampant abuses that took place in 2005-2007 of bad lending practices, inflated appraisal values etc. The condo conversion craze in Central Florida was a classic example of all of the worst components of real estate and everyone's interest in simply making money and not doing the right things. Most of those units were never worth close to what they sold for and there were no legitimate comparables to use, yet miraculously thousands of those deals closed, creating the mess of short sales and REOs in the condo business.
Best of luck with your current transaction.
dg/ nsb, fl
I just had the same thing happen to me with Bank of America. They appraised the home I am trying to purchase at $30K LESS than the agreed upon sale price. I am in NY and the home prices did decline somewhat but the agreed upon price is not way off the charts when put up against comps in the area. Both my BOA loan officer and real estate agent were completely shocked by the value. My loan officer is sending the appraisal for internal review along with additional comps that my realtor sent him so now we have to wait to see if the appraised value will change at all since the seller will not drop the price $30K. Hope you have better luck!
P.S. - I knew someone that had the same issue when their BOA appraisal came back $60K less than their agreed upon price but I still chose to go with them for the same reason you did - the ease at which we were able to get our pre-approval and commitment letter from them.
I respectfully disagree that the Bank/Seller will absolutely accept the appraisal as previously stated. Perhaps not. It really depends on the bank and the property and the appraisal and how much it is off.
I would say 'What do you have to lose by asking the bank to lower the price to appraisal"? It is simple answer really, yes or no and if no move on because you can tell the bank you are not the one that is going to overpay for this property. If the bank/seller waits they may find someone that will, but it should not be you. That is the simple advice I would give any customer of mine.
Try not to get too complicated when it comes to these issues. The simplest answers are most time some of the best and follow your instincts, if you want to negotiate and pay higher than appraisal then you may or maybe not. The home may be worth it to you. Best of Luck
I will leave my contact information for your convenience in the event you would like to discuss further.
You can have a market analysis done by your Realtor to help you make the right decision next time.
Marty, John and Mark are right... why would you want to pay more than the house is worth? You have an expert opinion in your hands that it is worth $126k, this is an excellent negotiation tool!
Century 21 Professional Group Inc.
Appraisers adhere to guidelines that are standard in the industry and must support the value with recent sales comparables of like kind property within the same community.
So, if this particular appraiser did what is customary and expected. His valuation is most likely within 10% of any other appraisal that would have been done.
Government at "WORK"!!!!
What we now have is an appraisal industry that is based on the lowest bidder gets the job. (Giving key jobs to the lowest bidder sure served us well on 9/11, didn't it.) HVCC was designed to address some abuse in the past, but as with many government programs it has made things worse. Complain to you congressman and senators. They lost you the house, not the lender.
He is correct when talking about : outside the area and not as knowledgeable about various neighborhoods. Also, the lending banks are subtly pressuring appraisers to use the most conservative data when assessing a property's true value."
But as a buyer, it should be your wish to buy at the best price possible. Thus you have in hand an appraisal that shows value lower than you offered and you have a bank that is not willing to lend more than the appraised value shown (be it correct or not).
Therefore, go to the REO and say: "my bank had an appraisal done, and it shows $20,000 less than I offered, how about lowering the price to appraised value!!!!"
You should be happy that your bank discovered you are paying too much for the house.
Why would you want to pay more than it is worth?
Go back to REO company and show them the appraisal and and ask them to lower price.
You just saved $20,000.
IF you cannot get a loan then others will have a problem too
So the bank could hang around and hope to find a cash buy to pay more thatnthe home is worth but then pigs may fly too.
So, talk to your agent and get him/her to tell the sellers of the problems and ask to get the price lowered to the appraised price
The bank will want to sell the home and can only do so at the market price. The appraiser will have found homes like this one that sold for less. So rejoice in the fact that you will probably get the home for less than the agreed purchase price.
Low appraisals are what we are seeing here in the panhandle as well. My last four transactions have been low appraisals, and normally the seller would pretty much have to eat the difference. The appraisal stands for 6 months, and the likelihood of the seller selling it for more is slim. The only way I know of for the seller to get more than the appraised value is to either challenge the appraisal which is not usually very successful or sell it to someone who pays cash so is not dependent on an appraiser. If you can see some glaring deficiencies in the appraisal you received this also would be reason to do another appraisal. Low appraisals are the newest of the challenges that realtors and sellers and buyers are facing!!
Myke Triebold, GRI, LMC