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.
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.
Good luck and keep me posted!
Joan Patterson, B.A., G.R.I., Realtor, License #01431647
Keller Williams Realty
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.
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.
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
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.