Hi Scourt,

Here is some information from the Bay East Assocaition on the inventory in San Leandro:

Days on Market (DOM) for the San Leandro area year-to-date is around 74. The median single family home price in San Leandro for August was $333,000. As of the last day of August there were 110 active homes in San Leandro. At current selling rates this means there is approximately 1 months of inventory in San Leandro remaining.

In other words the demand is increasing and inventory is low. I just wanted to give you the facts. What you do with this buyer and his getting appraisals for a lower price is up to you.

Meena Gujral
Help-U-Sell Achievers Realty
510-279-9580

The most important thing to remember in this situation is that the bank will loan money based on two things: A) The agreed sales price or B) The appraised value... whichever is LESS. Your situation is very common righ now due to something called HVCC, (Home Valuation Code of Conduct) Since May 2009 when this HVCC was instituted, appraisers are being called from other areas they are not familiar with and NOBODY can talk to them about the price of the house, they are under very strict rules and tend to be very conservative and the result are low appraisals.

We have dealt with this situation by having the buyer and seller make adjustments, like meeting in the middle, buyer goes up and seller go down to meet each other. If your buyer is a first time buyer, he might not have enough money to put down the difference and hence won't be able to help, your only recourse is to go back to square one and start all over again... Or take the appraisal and finish selling the house at the new price.
The other possibility would be to order another appraisal and hope that it comes at the price that you sell the house for. In order for this to work you would need to have at least 3 other houses that have sold in the area similar to yours for the price that you want. These "comparable sales" cannot be either Short sales or Bank-owned, they consider these type of sales "distressed" and some appraisers will not used them for fair comparables, besides they most likely will be lower priced than yours. Hopefully you find a good solution to your dilema, good luck.

Here is a blog post about HVCC:

http://activerain.com/blogsview/1054493/the-new-home-valuati…

You have a very interesting story. It is worth noting that relying upon an appraisal to negotiate a lower sale price is not going to work consistently.

Some markets that were experiencing price declines are now seeing reductions in inventory levels to the point where there are multiple offers for properties, resulting in sales prices exceeding "historical sold properties". This means that in order for the market to begin appreciating some buyers are going to need to pay "more than appraised value".

A balanced market is considered six month of inventory. You might want to ask your Realtor what the current inventory is and determine the absorption rate. In La Crescenta, CA the rate has fallen to 1.9 months of inventory and we are beginning to see homes selling "above market price" and multiple offers.

Thanks for your feedback. My home has appraised for our asking price 2 times already. The buyers have went back and gotten second appraisels and brought the home price down that way. We cancelled them and know have a new buyer. It is very sad when buyers have to get a second appraisel from their bank to bring the house down to the price the bank wants them to pay.

Scourt123

You have received a lot of good information here.

Bottom line: your house is worth what the buyer is willing to pay for it. If the appraisal is less than asking price, that's another story. But is it less than the accepted offer?

Then you have a decision to make and things to think about
1. Your buyer will present this appraisal to you, requesting that you reduce your price to the appraisal price. If you really want to sell the house, and having received a formal appraisal,you may want to accept.
2. You could ask your buyer to come up with the difference. Although unlikely, your buyer just might agree to do this if they really like the house
3. You and your buyer can split the difference and meet half-way

Be open to negotiations....there's bound to be a resolution acceptable to all.

Good luck!

Whether you like it or not, REOs (foreclosed homes) are the current benchmark for the market. You cannot expect to get more for your home just because it’s not an REO. Appraisers are very conscious of price per square foot and, since they’ve not actually been inside most of the comps they are using, they have no objective way of actually knowing property conditions. In addition, as Cindi mentioned, many appraisers are currently coming in from out of the area and have no basis for knowing the difference between Washington Manor, Floresta Gardens or Estudillo Estates.

Appraisers are technically not supposed to be using REOs and short sales for their comps, HOWEVER, in areas like San Leandro, most of the sales are REOs, so the appraisers don’t have much choice.

You can challenge the appraisal, adjust the price downward, have the buyer come up with more cash (very unlikely, especially if it’s an FHA buyer) or some combination of all of these. And don’t think that you can just stop the deal, go back on the market and start over again. You will need to disclose the low appraisal to the next buyer.

Your Realtor should have interacted with the appraiser when the appraiser visited your property. Many think it’s against the law under the new guidelines. It actually is not and we’ve made it a practice to do so. We provide a comprehensive list of comps that substantiate values. It’s saved more than one appraisal. And appraisers appreciate the help – especially those from out of area. They know they need all the help they can get.

Here is a link that may be helpful:

New Appraisal Guidelines: 3 Negative Ways This WILL Affect YOU!
http://www.trulia.com/blog/carl_medford/2009/05/new_appraisa…

Wasn't this up for discussion a week or so ago? Your asking price has nothing to do with the value of your home. IN ANY MARKET your home is worth exactly what someone is willing to pay for it. If the appraisal comes in lower than what the Buyer was willing to pay both sides need to come to the table and try and work something out. Sometimes a request for another appraisal is appropiate. In any case, you either both give a little or decide to cut bait and go your merry ways. The Buyer to find another property and you, the Seller, back on the market with the hope that the next Buyer is all cash or has a lender that comes up with a better appraisal OR you decide to wait and try again another time. Short sales and bank owned properties are not only tainting the values of properties everywhere they are also twisting the everyday buy and sell process as we know it. ..... Lori

Get your listing agent to review the appraisal to see if it makes sense. Due to new laws, some appraisers in your area are from differnet areas.....like SF or Sacramento and have NO knowledge of your neighborhood.
If this is the case, challenge the appraisal.

If however it makes sense, either the buyer needs to come up with the difference in cash or you need to reduce the price if you want to contunue with this buyer.