Home Buying in Corona>Question Details

Nikki, Home Buyer in

Trouble with appraisal

Asked by Nikki, Mon Mar 4, 2013

The appraisal came in lower than the agreed sales price and we must come up with the additional cash to close which we don't have. We wiped out, so now what?

Help the community by answering this question:



Prices are rising. Your situation is quite common right now.

If there were multiple offers on the property, it's possible that the sellers will want to cancel and go to the next highest offers to see if they'll drop the appraisal contingency and net the sellers more money.

It there are not multiple offers, then it is a matter of seeing how realistic the seller is while your agent requests that they agree on appraised value to close the sale.

If you're back to searching, make sure that if you don't have an extra $10k or so (to pay difference), you have your agent run a CMA to determine the most likely appraised value. It will take more offers that way but unfortunately it's a sellers market of rising prices.
1 vote Thank Flag Link Mon Mar 11, 2013
It appears to me that you should refrain from offering your opinion until you become more educated with appraising. You may be costing yourself a lot of money in commissions.
1 vote Thank Flag Link Tue Mar 5, 2013
Yanoska, you did it exactly right. Just because other people are motivated enough to overpay, doesn't mean you have to chase prices too. You educated your client on the possible need to come with with funds, they agreed and you priced your offer with their consent.

Unfortunately, there's nothing you can do to compete with investors and others that are able to pay above market, you just have to protect your specific client. It sounds like you're doing just that, so in my book you have tremendous integrity and should be applauded for putting your client's interests above your own. (A commission today can mean a loss of reputation tomorrow if you don't act in your client's best interest.)

I know this probably isn't much consolation for you or your client when missing the opportunity. However, if prices pull back to reality, your diligence and integrity will prove invaluable to your clients and your referral base will grow exponentially. There are opportunities fairly priced out there, we just have to work harder to find them.
1 vote Thank Flag Link Tue Mar 5, 2013
How do we urge Sellers to price homes appropriately when putting a home on the market? I showed a property last weekend, my Clients fell in love with it, Sellers asking $299K. I went through the whole valuation process with my Clients and explained I didn't think appraisal would come higher than $260K, Clients asked to place offer for $270K willing to cure the possible $10K difference. Per listing agent, Sellers received 3 offers higher than my Clients.
1 vote Thank Flag Link Tue Mar 5, 2013
You have two choices:
Find another house, or,
Find another Lender.
Maybe both!
1 vote Thank Flag Link Tue Mar 5, 2013
There are a few options. I would talk to my lender to see if they can re-do an appraisal. Did your agent run comps before you made your offer or was it just based on the sales price of the home? I would ask how either one felt about the price as well. Many times they can justify the price. When I am the listing agent, I meet the appraiser at the home to make sure we don't have any problems. Of course, there are no guarantees, but I do bring comps and talk with the appraiser as we are going through the home. Or have your agent talk with the listing agent to see if there could be some type of re-negotiations on price.

Good luck and keep me posted!

Joan Patterson, B.A., G.R.I., Realtor, License #01431647
Keller Williams Realty
1 vote Thank Flag Link Tue Mar 5, 2013
Yes, maybe. But then again, I don't do this for commissions.

I'm only interested in making sure my clients are treated with integrity and are guided from a fiduciary standpoint. As REALTORs, we hold ourselves to a higher set of standards than the general real estate selling public.
0 votes Thank Flag Link Tue Mar 5, 2013
Start over and see homes within your price range.
0 votes Thank Flag Link Tue Mar 5, 2013
I have noticed a lot of comments here related to trying to get the appraiser to raise the price, which is understandable. However, your situation is EXACTLY what I've been warning my buyers about in the current market.

Due to the limited inventory available, Sellers (mostly investors whom have bought recently and are now looking for a quick flip) are listing properties well above fair market value. I have noticed an alarming trend recently where most newly listed Standard Sale homes are priced at least 10 to 15% above fair market. This eliminates the potential for any financed buyer to close on these, even if they get the offer accepted. This is wasting a lot of people's time and delaying/hurting the real estate market right now.

If you are a cash investor or buyer and willing to take an immediate loss with the notion that prices have a lot higher to go over the long term, this is fine because you have to pay to play. But if you have financing contingencies, you should not be putting offers in on homes priced well above fair market value.

Instead of suggesting that appraisers compromise their ethics to push an appraisal value artificially higher, we should be urging our fellow REALTORs and sellers to price homes appropriately when putting a home on the market.

I currently have several new home buyers that have been searching for a home and we haven't made an offer in 2 months because there aren't any properties currently listed at a price that matches actual value. I'm not urging them to pay more than they should just to close a deal, I would prefer that they get their dream home at a price that will help them also gain financial security through home ownership by building equity rather than starting off in a negative equity position on Day 1.
0 votes Thank Flag Link Tue Mar 5, 2013
If your market is as competitive as ours here in South Florida, you will have no choice but to find another home if the Seller is pretty firm in sales price. How much lower is the appraisal?
0 votes Thank Flag Link Tue Mar 5, 2013
there are some options. We have had some success in getting lenders to redo appraisals when they were clearly flawed. If that is the case here your agent could write a rebuttal and see if that goes anywhere.

You now have three choices:

1. Cancel the deal
2. Renegotiate the price with the seller
3. Come up with more cash

Best of Luck
0 votes Thank Flag Link Tue Mar 5, 2013
Have your agent provide additional supporting documentation to lender to provide to the appraiser.
How far off? Are there pending sales. Try to work with appraiser.
0 votes Thank Flag Link Mon Mar 4, 2013
Hello Nikki,
This is assuming that this is a standard sale.
Generally your agent would ask the seller to lower the sales price to meet the appraised price. If your offer contains an appraisal contingency, then you should be able to cancel the deal and get your deposit back, if the seller does not want to agree to the lower sales price. This is also assuming everything is being done within the time frames of your various contingencies.
Without knowing your whole situation, it is difficult to give you a perfect answer, but this would be the way things generally go.
Not sure why you would want to buy a house that doesn't appraise, unless it is a very special house.
I am sure it also depends on the difference in price. Is it $10K or is it $1K?
Please contact your agent and ask him or her what other options you have in this situation.
Good Luck...
0 votes Thank Flag Link Mon Mar 4, 2013
Your agent needs to get the Seller to accept the appraised value. Since that's actual value, it shouldn't be a problem.
0 votes Thank Flag Link Mon Mar 4, 2013
Put your agent to work and have them do some serious negotiations for you. Otherwise sounds like you might have to pull out.

Craig Chastain
0 votes Thank Flag Link Mon Mar 4, 2013
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer