In the past, I have successfully worked with an appraiser to get an appraisal revised. However, that was a rare circumstance, afforded because the appraiser gave me a heads-up before it was sent to the lender. We looked at the comparables he used, and we also looked at the values he used for significant features of the home that I felt were under-valued, and we were able to agree on the revision.
I've also had an appraiser completely mess up a deal. He submitted a low ball appraisal to the bank (in this case, he was unprofessional, quite frankly), and even though we got a 2nd appraisal that was at value, the bank got scared and simply denied the loan. Looking at it from the bank's perspective, they had conflicting opinions, and didn't know which to believe, so they did the safe thing for them.
If the appraisal has been seen by the underwriter, your situation is probably near hopeless, if you want to get the price agreed to in the contract. A second appraisal is likely to do little to improve the lender's confidence in the value.
If the appraisal is 20% lower, then you are probably better off trying to get the buyer to work with a different lender, getting a new appraisal (perhaps at your expense this time), and then perhaps giving the buyer a bit more time to close. If it's more like 5% or less, that's tough....really tough. And a lot has to do with how much money the buyer is putting down. Do they have more cash? Are you able to make up the short fall? How much "in love" with your house is the buyer? Do they think it's worth more than the appraiser said?
All of those questions come in to play, but the buyer is really in more of the driver's seat at this point, than you are, unfortunately.
Talk with your Realtor. Was the Realtor present during the appraisal?
The appraisal is paid by the buyer, so it is not your property but you could ask which comps they used.
It is not uncommon for this to happen in these markets. So you might need to make an adjustment in the price...
In this market, there are several short-sales and foreclosures that are bringing down values.
Bill is right on. Also keep in mind that even if the second appraisal comes in at current sales price, the buyers will most likely look at the initial appraisal and their mindset will be that the sales price is too high. My advice would be to work with what you've got unless it is crystal clear that the appraiser is way off base.
The appraisal is reflection of what has been going on within ouy local market. As market values drop many people find themselves in the same situation you are currently experiencing....a home under contract that will no appraise for the contract price.
Our recommendation is to examine the area's recent sales for yourself. If you determine there is enough information available to contest this appraisal request a second appraisal to be done.
If the second appraisal does not produce the numbers you are looking for your options are:
1. ask the buyers to pay the difference
2. you pay the difference
3. split the difference with the buyers
4. let the deal fall apart and put your home back onto the market knowing that it probably will not appraise for a future transaction involving financing. This leaves you looking for a "cash" buyer that wouldn't mind the home not appraising.
We are sorry you have to deal with this but trust it is a sign of the times....with more to come.
The "Eckler Team"