Home Selling in 91745>Question Details

Jokuo, Home Seller in 91745

As a Seller, what's my right when buyer back out due to appraised value 10grand lower

Asked by Jokuo, 91745 Sat May 23, 2009

my case is in escrow for a 45 days period. I have already waited here for 35 days and was notified yesterday that the apraised value is 10000 dollar lower than the selling price. the buyer's agent ask me to lower the price otherwise buyer will back out. Also I find out that the buyer is on vacation trip and won't be back till 5 days later and an extension is also definetly needed. what is my right here. I refused to lower the price because I believe it's underapraised somehow and it's has nothing to do with me, the selling price is what we both agreed in the first place, otherwise there wouldn't be any further processing and I wouldn't be wasting all my time waiting.. am I right?

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Low appraisals are very common in our current market. This is due to the many foreclosed homes that have dragged values down all over the country. It sounds like the appraisal was a little late, 35 days is a long time to wait. But, what's done is done. Now you have to figure out how to make this deal work. Chances are that if this deal falls apart, you could very well have to wait a long time for another offer, possibly a lower offer, and then there is always the chance that appraisal will come in low too. I strongly urge you to work this one out. You have already spent 35 days "off" the market and could very well wait months to have another buyer. You really don't want that. I'm not sure what the purchase price of the home is, but $10K really isn't that bad. Maybe you should offer to split it with the buyer. If you can lower the price $5K, maybe they can bring in the extra? If neither side has the funds to bridge the gap, then I guess the deal is dead. But, if you do have the equity, then try to make this work. You will regret it if you don't. I've seen it happen too many times. I had one last year that was $25K low! It was tough. There really isn't anybody to blame here either. If the appraisal is low, then you just have to deal with it. But, have your agent at least check the appraisal to make sure they are using accurate comperables. Depending on the type of loan and the lender, sometimes you can petition the appraiser to make adjustments. But that is a real long shot. They hardly ever will make a chaange once the appraisal is in. Try to make it work. Best of luck to you!
2 votes Thank Flag Link Sat May 23, 2009

I have to also agree with Chris. He should be applauded for his answer! The best solution here is definitely try to work it out.

Good Luck!
Web Reference: http://www.abemills.com
0 votes Thank Flag Link Wed Aug 12, 2009
Appraisers generally use what is called historical data to determine the value. In the market today, this is not always the most appropriate method to value a property. Current listings can be deceiving because there are a lot of unapproved short sales out there. There is not a whole lot of credibility to the price an agent comes up with . . . I think many times they price it low to attract potential buyers. On the other hand, when a market is declining rapidly--pending offers can provide a more realistic figure of what people are paying for a similar property. If you go back more than three months for closed sales then the loss of market value may not be taken into consideration. Good comparable figures are based on a variety of factors and those factors depend on the market conditions.

I am finding that it is difficult to find comps on many properties. I hate to say this but other agents make it very difficult to do. They remove pictures from the MLS immediately, when a home has sold. How do you compare when you do not know what the property actually looked like. Addtionally, when it is an REO driven market and the comps used are all REOs--say for example that there are six REOs in the neighborhood, it will bring prices down 6%. It is generally about 1% less for every REO in the neighborhood.

I would ask to see the appraisal. Your agent should be able to determine whether there are any issues with the data used to obtain the valuation. If you believe there is a problem then you need to discuss your options with your agent who should know the answers in your situation or if they do not they should utilize the many resources available to determine whether there is a problem or not. I always say---when in doubt--consult a real estate attorney and I mean one who does nothing but real estate. Don't call your divorce lawyer or your criminal defense lawyer to give you advice in an area that is constantly changing. You don't go to a podiatrist if you are having urinary problems.
0 votes Thank Flag Link Wed Aug 12, 2009
Jokuo, I agree 100% with the answer Chris has provided below!

Best, Steve
0 votes Thank Flag Link Sat May 23, 2009
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