Unfortunately these days we are running into this situaation ALOT. You can try to dispute the appraisal, but more often than not, that doesn't work. Maybe the seller will make up half of the difference and you can make up the other half. I hope this works out for you.

Unfortunately, this wasn't a foreclosed home, that's just the problem. It is an owner-maintained home and is absolutely beautiful inside. Now we are out of a house, and the seller is out of a buyer, all because the foreclosed properties in the neighborhood are being used against the true value of this home. The house had appraised for 420K less than one year ago, and now the appraiser said it was only worth 345K due to the recent foreclosure sales in the neighborhood at the same price. There are no regular sales to use as comps. It's a losing situation for people who actually pay their bills on time.

My long term experience is that most will lose the fight, so do not bother. It is up to a good agent to not
let you be overly hopeful that you can "steal" a distressed property. We run detailed CMAs before seeing homes that the buyer will try to use an FHA loan. Most banks shy away from the FHA/Foreclosure combination, since it can fall apart very quickly - as yours did.
In Virginia, the sales contract has very specific language telling you what the steps will be. You need to follow that first, then tell you agent to find homes that fit your FHA profile.
Hope this helps.
Jay

You and your agent can ask for a second appraisal, challenging the first one. Ask your Realtor to provide the comps on which your based your offer, making sure that the distressed sales are pointed out to the appraiser. You can find out more information on the following FHA websites: http://FAQ.FHA.GOV for frequently asked questions and http://WWW.FHA.GOV for info about all FHA Programs/ Guidelines. Your lender may be able to help, also, especially one experienced with FHA loans.

Good Luck!

Wow. Did you show up? I hate to say it, but appraisers are more likely to support you if they like you. There is a lot of arbitrary stuff in appraisals - it's opinions and guess work. Some are better than others. It's like that in all industries.

In any case; yes. If your agent is seasoned and resourceful he/she will guide you properly and will challenge the appraisal on your behalf. Even a seasoned agent may not change the minds of every appraiser, but if your agent supports your position, then yes, he/she can challenge it on your behalf.

But, not so fast - don't you have a contingency? Will the sellers lower the price to meet the appraiser? That would be better for you.