Marty,

It would help to know which side you are with the low appraisal. If you are on the buyer side, you obviously only want to pay what the property is worth. Unfortunately if you are on the seller side, you can only sell it for what it's worth.

As the seller though, you may not have access to the written appraisal without approval from the lender since they are the actual client of the appraiser. If you can get a copy look at the data involved. is the square footage accurate or did they miss a room? What land value did they use? What adjustment figure did they use when comparing the sold properties for square feet, is it consistent wiith the quality of the home and did they catch all the upgrdaes you may have? How recent are the comparable sold properties, and were any of them distressed sales?

There are many reasons for low appraisal but the biggest one may be were you realistic in setting your sales price? No one can-rather should-be able to influence the appraisers opinion. Not the agents, not the lender, not the government. If there are reasons to justify an appeal, by all means persue them and document well in a non confrontational way. If you are anything but professional,courteous and reasonable you won't get much sympathy. Good luck!

Marty,

The reason there are a large number of potential sales not appraising for the contract price is the banks are under under fire to not make unwise loans. Part of this is making certain the properties they become involved with are assigned an accurate value.

This is particularly hard to accomplish because in many locations prop[erty values are continuing to soften. Our recommendation is also to have another appraisal done. It will be important to have your real estate professional do some real research and identify comps that support the contract price of the home. This information needs to be shared with the appraiser.

If it still doesn't appraise, you go back to the seller with two seperate appraisals that do not support their asking price. Your message at this point is, unless you come up with a cash buyer, this home is not going to sell for this price because banks will not fund it.

On the surface this is a shared problem, between the seller and buyer, but really is more of the seller's problem because you can move on to the next opportunity and find a nice home. While the seller is stuck with the situation as it exists.....unless they decrease the price.

If I were you I would hire another appraiser which is lender approved and present the right comps to him and see if the house is worth! works in best interest of seller n buyer. It will ususally cost sellers additional 3-400 But it has ALWAYS worked for me. I work in VA though but thought it might ease out the fight going on in here:)

Are you serious Teresa?

We're in this meltdown because lenders were making loans to anyone that could fog a mirror, real estate folks were not properly counseling clients and only chasing commissions and buyers were completely irresponsible and flat out stupid with handling their personal finances. That was compounded with owners refinancing homes past their eyeballs and only worrying about what the monthly payment would be. That blame belongs on the mortgage and appraisal industry.

The idea that the market sets the price is accurate - when it was unrealistically high everyone was happy, well now that reality has set in everyone is whining. The bottom line is that a correction is needed and there will be cases like this, the comps are the comps and appraisers are getting twisted by underwriters - you have no idea how the guidelines have changed.

History has shown that what someone is willing to pay for something doesn't always refect the actual value.

Hank

I had this same thing happen to me when I sold my property. I'm tired of hearing that there is nothing I can do. Appraisals are subjective exercises that can never be proven or dis-proven. No property is the same as the other. One house may be sold under distress or under special deal to family. Why should that influence the value of my property? It seems to me that the appraiser's job is to justify giving a lower value than the selling price. Isn't market value what someone is willing to pay for something? If I had a buyer willing to pay $960,000 for my property, why did he value it at $900,000? That's only 7% difference. How can he be that accurate? There are no checks and balances with this process. I would think unless he determines there's fraud between buyer and seller, the selling price should stand as the market value. I realize these are tough times, but I feel this process is unfair to sellers. I was not allowed to review the appraisal for accuracy, nor was I able to get another appraisal. It was either take the price the bank set or cancel the deal. I think there should be a class action movement to protect sellers from bank colluding with appraisers in order to reduce the amount they have to lend. This is a financial loss that no one seems to feel is worth fighting about.

Marty,

Regardless of weather or not you sell to this buyer you are now stuck with the fact that your property is worth less that your asking price. If the current buyer walks, the reality is you may be left selling it for more than 30k below the present price.

You will need to ask yourseld if it's worth losing a real buyer that is willing to buy your house now. Ask your agent to reopen negotiations in an effort to find a new selling price that will meet some place in the middle.

These are difficult times, requiring difficult measures. We will be seeing much more of this as we proceed through this real estate mess. Our advice is to sell it and move on......

Good luck

Hi Marty,
I put a stipulation in my offers for my Buyers regarding the sales price and appraisal. That way my Buyer is protected if the home doesn't appraise for the sales price. Find out what comps the appraiser used. Show them comps that do prove that the sales price is in line with that. If it's an FHA loan, the appraisal is in the system for that home and you can't change it. The seller may have to reduce the sales price in order to get it sold or the Buyer can come up with the difference. I have seen both happen. I don't know how much is being put down on the loan and don't know if you are the Buyer or Seller. Your agent should be able to give you a reason why on the appraisal. It's pretty easy to look at the report and figure it out. What does your contract say about the sales price and appraisal? Feel free to contact me.

Jen Bowman, Realtor
Success Realty
404-456-5024

Hi Marty,

To prevent losses for when these type of situations occur, I always negotiate a specific stipulation in my client's contracts. I specifically state that the property must appraise for at least the purchase price and if it doesn't, the seller has a specified amount of time to reduce the price to meet at least the appraised value. If the seller refuses, they agree to a full refund of the earnest money within 48 hours.

As a lesson, it is extremely important to be very specific when negotiating an offer. Some selling agents have teased me about overdoing it with the special stipulations, but I simply say that I rather cover all of the essentials than to be sorry. The last thing I want is for a buyer to lose any money.

Fabiola Fleuranvil, MBA
South Owens Realty
info@ATLHomeForSale.com

Marty
Stop the nonsense.
Look at the stats in your area. I don't know the specifics, but if the appraisal is low, unless your REaltor met with the appraiser and gave them the right comps, it is very likely that due to the mortgage meltdown appraisers are under scrutiny.

They are not going to going to stick their neck out for you. This is their job, and they are going to be very conservative. Meaning in a declining market (and most markets are declining) they are going to find comps that they think they can back up. I don't know how much $30K is...is that 10% of the selling price?

KNow that the one place we as agents can help is to meet the appraiser at the property, show them the comps that matter. My experience is that in most cases, particularly with this market, most of the do know what they are doing. Remember, we don't make the market, we just work in it.

Hate to be a realist, but it is not impossible for buyers to agree to pay too much in a declining market.

Hank will look at your appraisal for free. That's pretty cool.

Marty - if your agent can not give you a good reason, then you are being misled.

If your agent did not assemble a timely amendment to present to the seller about this appraisal issue, then you are in a predicament. The other agent can help the seller understand the next steps, if you are timely.

If you lose your Earnest Money because you did not submit timely notices about this appraisal problem, then you only have yourself to blame.

The seller may just agree to a reduced sales price - many of them do.

I trust that your agent is at least monitoring the time line and mitigating your risks in this process.

If not, that is a terrible thing.

Hi Marty,

I'm not really sure as to whether you are the buyer or the seller in this case. If you are the buyer then hopefully your buyer's agent used the Appraisal Contingency Exhibit which will enable you to ask the seller to cut the sales price or you can terminate. If you are the seller than it can be much more difficult. You can have your agent contact the buyer's loan officer and ask for a list of comps that the appraiser used and possibly have your listing agent provide them with additional comps that have sold in the last 6 months that would support your current under contract price. The loan officer can appeal the appraisers value and in a small number of cases the appraisal can be overruled and the appraiser will make adjustments. But...the adjustments may not be the full $30,000 you need but can lower it to a more feasible number.

Good Luck and let me know if you need any more help,

Lisa

Marty -

If the house didn't appraise then the answer is that it just might not be worth it!

I'm a certified appraiser as well as an agent - have been appraising since '89 in NY, NC and GA. Appraisers deal with historical data - what's actually CLOSED while agents are typically looking ahead - the truth is somewhere in between.

Of course get a copy if you can. Have your agent provide LEGITIMATE CLOSED comps to the appraiser for reconsideration. Agents have a bad habit of tossing the kitchen sink and hoping something sticks - do not do that as it only wastes time. I have occasionally changed my opinions upon appeal - if an agent makes a cogent arguement supported with good data then I'm open. That's not ususally the case though.

You don't mention the price so that 30K can be a huge spread or small one off the sale price. This might simply be an example of a buyer that falls in love with something about your home and they are willing to pay for it. If that's the case - the agents need to get together and figure this out. If your agent is inept, touch base with her broker.

I'm happy to look at the report if like - my info is below - good luck.

Hank Miller, SRA, ABR
Associate Broker & Certified Appraiser
Prudential GA Realty
678-428-8276

First you will need to get a copy of that appraisal to see which properties the appraiser used to compare to yours and how the comparables used were adjusted in value. After looking at the appraisal, if you feel that the appraisal was unfair, then your agent needs to bring to the appraiser other comparable sales that can justify your price.

I have had 3 cases where the appraisal came in lower than the sales price, in 2 out of the 3 cases, the buyer and seller split the difference. Most contracts have a clause where the buyer can terminate the contract if the property does not appraise. If that's the case, then neither the buyer or seller have any obligation at this point, so negotiation will be the key factor!

I recommend that you move quickly so that the other party to your transaction does not get "cold feet"!

Good luck!
Amanda Herring
Realtor-Broker, ABR

Marty,

I assume from your note that you are the seller. If the appraisal was ordered by the mortgage company, there is little you can do. You can review the appraisal and see if they used distressed property (foreclosures) as comparisons. You may be able to contest the use of them but I doubt the mortgage company will listen to it as they will have to get th appraiser to change the appraisal and they typically will not do that.

Good luck as this may be a problem for future offers also.

You can have your agent challenge the appraisal by doing a reasonable market analysis which the mortgage company will look at and compare to the comparables that the appraiser used to see if there is actually a reasonable discrepancy. Typically mortgage companies want to see 4 comps that can show a discrepancy. I have, on three occaisions been able to have appraisals adjusted by doing this.

Appraisals are human and are still adjusting to this market!

Good luck!

Marty,

That's great! Depending on your deal, you can re-review the appraisal or the seller may match it. Most likely you have just been saved from making a $30K mistake!

If you have an out take it and find another home. There's too many homes on the market to be buying one that can't appraise.

If I'm wrong and it's really "THE ONE" then go to the Agent's Broker (since your agent couldn't answer your question).

Short Answer:
- Pay the $30K
- Walk Away if the contract allows
- Seller can pay the $30k difference
- Ask for an appraisal review

If the other party has an appraisal contingency exhibit as part of the contract they can ask to renegotiate or they can terminate. You can ask for another appraisal but no one is legally obligated to do one. As for why you can ask for a copy of the appraisal but no one is obligated legally to give that to you since you did not pay for it. Sorry for the not very upbeat answer.