I strongly suggest that you get another appraiser, one that knows the area. May good appraisers will go out of the area in which the home is located in order to find good comps. I do not believe that using foresclosure, short sales, etc. is a proper representation. Your lender can review the appraisal and also your agent and appeal. Good luck!

Several of the previous responses are excellent, especially those of Daniel and David. Everyone has given you good suggestions. Duplexes and any other multi-family dwellings are almost always investor owned rental units and generally appreciate slowly. I own several places in the 27701 area and discovered that you, the buyer needs to be there when the appraiser comes. You, more than the agents or seller need to be able to explain to the appraiser what is going on in the neighborhood, why this is a good buy. There are very few new duplexes in the 27701 area, and another question is whether they are rented. The appraiser could use the income approach which takes into account rent.

My experience is that appraisers do not like to change their initial opinion, certainly not by much. As in any field, there are fair and unfair appraisers. My last 2 sales both appraised low for different reasons. In one, the appraiser was from Siler City, not the upscale neighborhoods of N. Chatham county so he didn't know the area or the neighborhood. For the other, the appraiser came in blustering and snarling about how sellers always think their homes are worth more than the value. Started off with a chip on his shoulder.

Are you concerned that the seller is not willing to sell at a lower price? How much do you want this duplex? Are you paying cash or getting a loan?

Please don't hesitate to call me, even if just to bounce ideas around.

If it did not appraise why would you want to challenge the appraisal and purchase the property higher then market value. Use this to renegotiate fair market value.

http://www.homesaleschinohills.com

You can dispute the appraisal. Have your agent pull comps and compare to the appraisers comps, and see what other comps are available. Depending on where the appraiser came from, they may not be familiar with the area and have not used the best available comps. Your agent, and the seller's agent (who came up with the original listed value,) need to put some leg work in and see if there are better comps available. If there are, have them contact the appraiser to discuss why those comps were not used (Agents are allowed to talk with the appraiser under the new appraisal rules, but many agents think they are not allowed to.) If there are truly no non-REO/Short Sale/Auction comps available, then consider the condition of the property you wish to buy compared to the appraiser's comps. Did the appraiser take into consideration the work that usually has to be done to REO/SS/Auction comps to be in the same condition as your property (assuming it's not in a poor condition)

You can also hire an appraiser yourself and see what value they come up with. If it is different than the 1st appraisal, you can go back and see if the 1st appraiser can justify their value.

The seller can also choose to lower the price, or they can stick with the price and you either have to come up with the difference in cash or back out of the contract.

Good luck, it todays market appraisers are being very conservative, sometimes too conservative on values, so you may need to be able to prove with concrete comps that the appraiser was wrong.

Daniel

Dear House Buyer -

It certainly can be a challenge in this market with the appraisal - remember that the appraisal is considered ' an opinion of value' some argue the true value of a property is the price at which the seller agrees to sell and the buyer agrees to purchase. Of course if you are not paying cash then a low appraisal certainly complicates the loan process!

Here are a few different answers to your question of 'What to do if the appraisal is lower than the purchase price - I'm providing a few different choices as I don't know your individual circumstance.

- If you are working with a real estate agent that's representing your interest as a buyer's agent, then refer the question to them

- If you are not working with an agent the you can reach out to a local real estate attorney because the best answer in my opinion is - what options does your offer to purchase contract give you the buyer if the property doesn't appraise? - I know what our default NC Real Estate Agent Forms state but I don't know what your actual agreement states (and I don't need to know because I do not represent you)

- The sales contract is the key - what options do you have as the buyer - can you walk away and receive your earnest money deposit back? Is there a time line in which you have to exercise such an option before you forfeit it?

- If a lender is involved then what are they willing to do? Are you willing to make up the difference? Is the seller willing to adjust the price down to the appraisal amount? How about something in between?

I know that I've given you more questions to think about than answers but hopefully it will get you started in the right direction!
_______________________________________________

This Answer Provided by David Williams, Broker/Owner of CaryRealEstate.com

David is a Cary Native and Trusted Adviser / Friendly Authority on Cary Real Estate

Licensed NC Broker & Realtor

This answer is not to be used as legal advice nor is it intended to solicit another Realtor's client!

In the current market those maybe the only comps the appraiser available. The seller can lower the sales price to the appraised value or you, as the buyer could pay the difference, which would not be practical in most cases. Perhaps you and the seller can agree on a price that while lower than the contract price is one they can live with. If not, it maybe time to start looking for another property. Tough situation but not uncommon lately.

Fritz Hine
Coldwell Banker HPW

Those ARE THE COMPS...thats what they have to use because if you were to put it up for sale, those are the homes you are competing with, bank owned, short sales, ect...

Either pay the difference in cash, get a lower price, or move on...

Sometimes foreclosures, short sale and bank owned properties are all the appraiser has to use. If the appraisal comes in lower that the purchase price then the seller can either lower the price or cancel the transaction. If it doesn't appraise out, the lender won't approve the loan. The buyer can pay the difference out of pocket, but why would you? See if the seller will renegotiate the purchase price.