I have had two transactions recently where I have faced appraisal issues. In one of them I was representing the seller and the property appraised $20K less than purchase price. The buyer and seller agreed to split $10K each where the seller came down $10K and the Buyer brought in an additional $10K and we successfully closed escrow yesterday. It really helps when the client is willing to take the advice of the agents and do what is necessary since no one can control the appraisal decisions.
In the second transaction I was representing the buyer and the appraisal was only $10K under the purchase price. The seller refused to budge on their price. The buyer did not have the additional cash plus he felt he did not want to pay more than appraised value. Needless to say we lost the deal and the buyer walked. The seller has not been able to get an offer and the property is still on the market.
As you can see, appraisal issues are everywhere. We need to deal with them and try to make it work out where both the sellers and buyers are satisfied at the end of the day. Putting the house on the market is not the best solution. You will face the same problem again. Plus everyone will want to know why the house came back on the market. When they hear it was because of appraisal issues, the offers will come a lot lower than your last one so you may as well work with what you have in you hand and get it closed.
Hope that helps. If I can be of further assistance you can reach me at 510-279-9580.
Help-U-Sell Achievers Realty
With multiple offers on every decently priced property, you should have no problem selling your home if you put it back on the market. Many buyers are desperate to get into a home to qualify for the tax credit that ends in November. The window of opportunity is closing, and this is adding fuel to the market. Add to this the current shortage of inventory, and it is truly a sellerâ€™s market.
However, be aware of two things:
(1) As stated below by others, many agents are telling their buyers to bid high to land the property and then let the appraisal determine the actual price. On the surface, this seems like a logical move on behalf of the buyers. However, it often puts buyers in a contentious situation with the seller.
(2) As stated below by others, appraisal rules have changed since May 01, 2009 and it is VERY difficult to get a decent appraisal. See the blog link below for more information. In addition to the problems listed below, it is not uncommon for appraisers to be out-of-area and unfamiliar with local neighborhoods and values. As Pacita pointed out, it is the bank that orders the appraisal and the appraiser will more than likely ignore any existing appraisal by others.
Here are my recommendations:
(1) If you get multiple offers, counter the offers with the highest down payments and have them match the price of the highest offer. If they are willing to go to that price, include language in your counter offer that includes the removal of the appraisal contingency from the outset. This clarifies to all parties up front that they cannot use a low appraisal as a reason to back out of sale, nor can they try to renegotiate the price (This will not work with FHA buyers). Many buyers can and do bring more money to the table to bolster their down payment should the property not appraise for full price.
(2) The appraiser ALWAYS calls to get access to the property. Even under the current rules, Iâ€™ve discovered that appraisers welcome my input as the listing agent. If I am concerned that the property may not appraise, I make it a point to meet the appraiser at the property and provide documentation that validates the price. In most cases, I provide information about local property conditions that the appraiser would not know otherwise. In every situation I have been thanked by the appraisers and my input has been reflected in their assessment. This is still allowable under the new rules and is a prudent practice for listing agents.
Here is the post mentioned above: http://www.trulia.com/blog/carl_medford/2009/05/new_appraisa
Let me know if you have any additional questions: firstname.lastname@example.org
In May 2009 appraisers become a "neutral party" and are now governed by something called HVCC (Home Valuation Code of Conduct) Under these new rules nobody that has anything to do with the transaction, i.e. seller, buyer, realtor, lenders, underwriters, cannot even talk to the appraiser! It is considered illegal and can void the appraisal. Therefore the comparables must be there for everybody to see! 2 of my last 3 closings had to be renegociated between the seller and the buyer because the appraisal did not come at the agreed price. I recommed that you be flexible with your price if the difference is not too big, and try to negociate with the buyer if possible, there are no guarantees that the new appraisal will come any different with the next buyer. I am a San Leandro Realtor and I know that the lack of normal sales is hurting all of us. Good Luck
The buyer's lender orders the appraisal, not the buyer. The buyer, buyer's agent and the buyer's mortgage lender could not and should not influence the appraisal. The lender's underwriter reviews the appraisal and makes the decision to approve the loan or not.
We can't assume the buyers are playing games --- if they offered to buy the property at what both of you felt was an acceptable price at that time, that's good. But the bottom line is, if the buyers have to get a loan, it can and does happen that the property could be appraised at less than what the offer price is. The lender isn't going to approve a loan for higher than what the appraiser says.
You and the buyer could negotiate the difference. For example, if the buyer offered, and you accepted $300K, but the property is appraised at $280K, you and the buyer could negotiate to have you lower the price to $290K, and have the buyer come up with additional money to cover the $10K difference.
If you know true value of home you don't have to worry about appraisal ... NOW if your home is overvalued lender won't allow buyer purchase a home priced over market value.
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