Home Selling in Los Angeles>Question Details

heymjo, Home Buyer in Las Vegas, NV

Is there anything that can be done about appraisals coming in low because of all the short sales and foreclosures?

Asked by heymjo, Las Vegas, NV Mon Dec 24, 2012

I puchased my home in the San Fernando Valley 5 years ago when it was a foreclosure. I paid $575K; the previous owner paid $765K before it was taken back by the bank. I subsequently put about 50K into the housen with Jetliner Views of the San Fernando Valley and a lot of remodeling. After 4 months on the market, I finally got an offer of 580K for the house, but the appraiser now claims the valuie is 550K! The problem is that there have been no regular sales in the past 6 months, but a lot of short sales. My buyer will not pay more than the appraised value. Do I have any recourses here?

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Carl Medford’s answer
If your buyer is not willing to go any higher, you only have there recourses:

1. Accept the appraisal at value, proceed with a lower price and call it a day.
2. Take it off the market until values grow.
3. Appeal the appraisal – this may take a while and, even if it comes in higher, there is a good chance the buyer will not be willing to go higher than the original appraisal.

I know it totally sucks – we run into this on a very regular basis. Unfortunately, if the only comps are distressed sales, then, in reality, those are the comps whether you like it or not.

Here are a couple of posts that may be helpful:

Top 5 Foreclosure Myths for 2012
(Point #4 is applicable to your situation)

Yet ANOTHER Buyer Loses A Home To A Botched Appraisal (Buyers No Longer Setting Prices)

Missed It By THAT Much: Top Four Solutions To Low Appraisals

1 vote Thank Flag Link Mon Dec 24, 2012
Appraisers should not be using short sales or foreclosures to obtain value. The problem with short sales there is no regualtion therefore no rhyme or reason to how they are priced and what a bank will accept. The buyer needs to go back to their loan officer for help.
1 vote Thank Flag Link Sun Dec 30, 2012
Your only real recourse is to pull the property off the market and wait until prices improve further. The housing market in southern California has been recovering sharply this year and it's unfortunate that you live in an area with so many short sales and bank owned properties as comps. There's no way around that with the new lending regulations. Or, you can provide seller financing and avoid the appraisal all together.
Web Reference: http://www.archershomes.com
1 vote Thank Flag Link Mon Dec 24, 2012
if you have comps that support it pull them within the last 3 months and send to the appraisal company... You can do a rebuttal
Also if you feel there is an issue always meet the appraiser there with your supporting comps..this has worked for me in the past..

Thank you
0 votes Thank Flag Link Mon Jan 28, 2013
You can request another appraisal but wondering why the current used short sales as comparable?
Is the buyer really looking to lose the property over a few bucks? It doesn't look like your making your investment back here so either have buyer make up the difference or hold out for a new buyer who'll pay the price you need.
Good luck
0 votes Thank Flag Link Mon Jan 28, 2013
The recent sales are holding the values down in this market. The option is to take the appraised value or the buyer will have to pay the difference between the bank appraisal and the contract price. If there is no movement then this deal will not move forward. You will have to find a purchaser who sees the value in the home. The same house can appraise for a different number with another buyer. This appraisel is based on the current market for the current purchaser and their financial picture.
0 votes Thank Flag Link Sun Dec 30, 2012
Dear Heymjo,

Appraisals are a huge issue right now and causing problems for home sellers because of the market.
Some home sellers have put together packages along with their Realtors that go over the home improvements with ,CMA's and features so that the appraiser can note the differences between their home, and others in the immediate area that have sold.
This will sometimes improve an appraisal enough so that if the seller will drop the price and the buyer will increase the offer there can be a "meeting of the minds", so to speak.
Sometimes a seller will ask for a second appraisal which often comes up a different value.
It does seem unfair that a "regular sale" home has to compete with a "distressed" property but that is the competition, unfortunately. Please also look into what the short sales final sale price is, it will be much higher then the listed price and may help.
0 votes Thank Flag Link Fri Dec 28, 2012
Very, very good question. Unfortunately, through the eyes of the lenders appraiser, it's all about comps, location and condition. That's nationwide too. You can dispute the results once, but it's unusual that they change it. From a buyers perspective, your only options are to walk away or come up with the gap. Many times sellers are willing to negotiate a fair split. What it comes down to is the ultimate value that particular value has to you.
0 votes Thank Flag Link Fri Dec 28, 2012
Purchase price is based on Market Price and ultimately what a buyer is willing to pay. You can justify and document all improvements, etc. but if a buyer is not willing to pay the price there is no amount of justification that is going to change their mind.
You have three choices. 1. Sell at the this price 2. put back on the market and wait for a better offer 3. hold property until values increase.
0 votes Thank Flag Link Fri Dec 28, 2012
I just finished renegotiating an appraisal and this is what my sellers and I did:

1. Make a list of all upgrades, include receipts and date of everything, this would be great in a binder with tabs for easy access, provide this to the appraiser

2. As the agent, provide new comps to the appraiser, see if there's anything else that has Just Sold

3. Make sure to have all this to him immediately

4. Line up a second appraiser and make sure to get his opinion before going with new appraiser

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0 votes Thank Flag Link Mon Dec 24, 2012
If your agent was not able to justify the price with standard comps, then you are at the mercy of the appraiser. If you appeal, you will need a way to justify the price. Short sales generally are comps since the lenders are looking for at least market value.
Web Reference: http://www.homejane.com
0 votes Thank Flag Link Mon Dec 24, 2012
You have few options in this case:

1. Accept current low value appraisal and close transaction.

2.cancel transaction and wait for another buyer (cash buyer who won't have to rely on appraisal value).

3. Can cel transaction and take property off the market and put it back on the market once you have some compatible sales that can support your desired price.

4. You can try to dispute appraisal and justify higher value- which in your case will be very hard due to upsets of compatible sale.

Hope this will help you.

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0 votes Thank Flag Link Mon Dec 24, 2012
in the future when you meet appraiser have a list of the repairs and comps sales ask selling agent not to record appraisal value and get a second opinion with another appraiser ,you may have to pay for second appraisal,this time be prepared ,try to work with your current appraser first.good luck
0 votes Thank Flag Link Mon Dec 24, 2012
Where's the house? I have someone looking in that price range in the west Valley.
0 votes Thank Flag Link Mon Dec 24, 2012
the only thing you can do at this time is give a detail list of all the repairs you did at the property to the appraiser of course would not hurt if you can find at least 3 closed sales but thats not your case you said there is no comps sales in the last 6 months ,also email some picture of property conditions before repairs.
0 votes Thank Flag Link Mon Dec 24, 2012
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