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It depends, appraisal is supposed to be the amount of which a property will sell, so if property is priced above that amount, of course it will be low. This has alwasy been an issue.
Also, there are some guidelines regarding buyer financing, FHA or conventional. Of course, cash most of the time will not have an appraisal contingency.
I have heard stories of appraisals coming in low, but compared to the number of home sales a year, it isn’t all that common. Although the bank may decide to stay with the first appraisal, why not try to “prove” that the house is worth more (if you truly feel it is). For instance, say you made an offer on a home and the appraisal came back less than what you offered. Request another appraisal and provide documentation to back up your request. Send the bank regarding stats on recently sold homes that are similar in terms of: Quality, square footage, acreage, condition, and age (your Realtor should be able to help you with this one).
Appraisals that come in low may be due to the following:
1. For better, or worse, the new appraisal guidelines that went into effect have caused some the appraisal process to be more stringent.
2. There are a low number of conventionally sold homes around the neighborhood and homes sold that were foreclosed or approved short sales were used.
3. Having an appraiser that isn’t from the Twin Cities metro therefore undervaluing the property.
That mind set only points up the importance of pricing a property appropriately. I'm sure my colleagues would concur.
Low appraisals are usually the result of the following:
-using distressed properties as comps for a home in good condition
-misunderstanding how quickly neighborhood blocks change around here
-non-armslength transactions (when buyer and seller have some kind of relationship
We don't have many options these days for correcting a bad appraisal. Sometimes the lender has an opportunity to get another one but it's a case by case thing in my experience. A loan officer would be better able to talk about that.
Best of Luck!
I don't specifically work your area, so I don't know about Armatage. I will say that appraisers, over all, are being conservative on their assessments. Since they may have been cavalier about their assignment of property values in the past and have been accused of being part of the artificially inflated real estate values of a few years ago, I believe the pendulum has swung the other way. So, in my experience for what's happening in the Twin Cities, appraisers tend to go to the more prudent side of the price range.