Hope that assist you.
With a closing date of 12.31.12 I would assume that your appraisal is done and hopefully came in at value. Let us know what happened. We are always glad to help here on the Trulia site; but sometimes we never get to know the hopefully happy results in reference to the questions. This is another example of how it is best to have a Buyer's Agent in all the home purchases you do. Otherwise you are on your own. You are not being 'represented' by this agent. Best of success.
Robert McGuire ASR
Your Castle Real Estate
Direct - 303-669-1246
That being said not all homes are the same but if there are 15 other similar size homes listed for under $ 275,000 you might be paying to much and after you move in you could discover your dream home has neighbors who are not good, the floor plan might not fit your furniture, your live style might change in a few years and when you are ready to sell you will be having to ask more to recover what you over paid. assuming you are over paying.
I am an appraiser ( 30 yrs ) and have also been a realtor so I have seen both sides. I find most people buy with emotion and try to rationalize after with logic.
So all I can say is take care and go look at a few of the other homes listed for sale to make sure you are paying the right price.
David Fletcher Licensed Appraiser and real estate broker in the Province of Alberta
Hope that helps to clarify. Feel free to give me any additional thoughts. I am also going to post a more specific question on what to do from here.
Second, The standard Colorado Real Estate commission approved contract, specifically allows you to get out of the contract if it has not appraised for the purchase price, by the Appraisal Deadline. So, legally you can bail if you would like, at no cost. Practically, this doesn't sound like it is what you want to do.
Your options moving forward would be to pay the price, regardless of the appraisal (the lender uses the appraisal to figure out how much they will lend you. ie..80% of appraised value) In this scenario, you would have to come up with more cash at closing to make the deal happen. Or, most likely, negotiate with the seller a figure that is mutually acceptable.
The option for the lender disregarding the appraisal, acceptable risk or not, is very unlikely in the current lending environment.
Unfortunately, this is happening more and more often. If you really like the home, feel it's an acceptable value, and have a Seller who is fair and reasonable, then you should be able to make it happen. Good Luck!
I am a broker and appraiser, and sometimes find that when there is a situation like yours, where the property was not listed prior to contract, or was for sale by owner (FSBO), the seller may be a little (or a lot!) proud of their property, which is sometimes understandable... like if they had it custom built, invested a lot of money in renovations, or they need to net a certain amount to move on... none of which have to do with market value or what a "typical" buyer would pay for the property. A bank appraisal is virtually always based on fair market value (unless the appraiser/client address another scope of work - another definition of value.
Get a copy of the appraisal when it is complete. Read it thoroughly, including the "fine print". There is (or should be) a statement of limiting conditions and certification which will include the definition of market value - in which it speaks of a "typical" buyer. That is sometimes the difference between an appraiser's opinion of value and what a buyer / seller agree on, as that particular house may be perfect for you, but ho-hum to the majority of buyers.
While the bank (and seller) may consider the appraisal "gospel" once it is complete, as mentioned earlier, appraisers are human too. I've seen some good appraisal work, and some terrible appraisal work. If the appraisal is a problem, I would suggest you get a copy of the appraisal, go over it, then review it with your agent (hopefully a buyer's agent) â€“ in your case a Dual Agent or Seller Sub-Agent I presume, and then maybe contact your mortgage loan officer and ask some questions if you see anything questionable on the appraisal. Your agent should be helpful (depending upon the type of agency), as they are supposed to know the market, and the lender may / should be helpful, as they should be familiar with appraisals (at least the underwriter should). If you cite error(s) or suspect work, it may well be worth the time and money to hire another appraiser (with references... I suggest someone with years of experience in that immediate area, and/or a member of the Appraisal Institute, the American Society of Appraisers, or the National Association of Independent Fee Appraisers. Membership and / or designation shows that they are likely not "form-fillers", which is part of the reason for the mess we are in (another topic).
The short answer is... Ask questions about the appraisal process, get a copy of the appraisal, do your own homework on the market and prices of competing homes, and demand good service! A low appraisal may mean that the transaction falls through, but it may be the best thing that ever happened to you financially, especially if we are talking about a million dollar home! A low appraisal will likely mean that the price has to be reduced to the appraised value (if the seller wants to close and the buyer wonâ€™t pay the difference) and you save some money. BEWARE: Whatever the value, get a copy of the appraisal, read it, ask questions, and press for answers for anything that doesn't "add up"! Just because it appraises for the sales price (especially if it comes in right on the sales price!!!) or appraises higher does not automatically mean you are blessed and highly favored so to speak. There are those among us known as prostitutes, skippies, deal-makers, etc., as they have client relationships that are "mutually beneficial" if you know what I mean (one hand greases the other)...
All that said, there are professional, ethical / honest, educated, experienced appraisers that do a great job and can help insure that you are not getting ripped off (as can a home inspection from a professional, ethical / honest, educated, experienced home inspection relative to the condition of the property). I suggest the home inspection first by the way... then you'll know whether to have it appraised or not. The appraisal is only as good as the inspection, measurement, research made, data considered, and appraisal theory applied. IF there is a value issue, then I'd say the onus is on the seller and listing agent to defend their price.
Best wishes and Merry Christmas.
Have you had this conversation with the agent? Bring this concern to his/her attention may help by getting the agent to do some work identifying comps that will support the asking price. Most appraisers will ask for agents to provide any input that will assist them in creating the appraisal.
Has the agent had this type of conversation with the appraiser?
I am assuming you are not buying this house for cash. My experience is : Your lender's appraisal will be gospel and final word for your lender - If the appraisal comes in under selling price & the seller won't budge then there won't be a transaction.
If the lender is willing to accept a higher selling price as "acceptable risk", then I guess you & your husband will have to duke it out. In the current market conditions, I would not advise my clients to pay any more than the appraisal.
Your realtor, by Colorado law, is now functioning as a "Transaction Broker", which gives him/her some restrictions on what he/she can do. A Transaction Broker is not an advocate or agent for either party, the obligation is to the transaction.
Your Castle Real Estate
950 Wadsworth Blvd, Suite 120
Lakewood, CO 80214
Cell: 303-746-8827 Fax:303-265-9318
Secondly, while this doesn't happen often, you might want to just verify the appraiser appraised the correct home. Appraisers are human and I have had the numbers come in way off only to find they appraised the wrong property.
Thirdly, most reputable Realtors will not represent both sides (Dual Representation) because of the liability risk and the fact it is hard to represent two apposing sides with some bias. Now if the Realtor is acting as a facilitator (which means they do not represent either side), that is another matter. Either way, if you have questions about this transaction or would feel better knowing someone is on your side, you need to find a Realtor that will only represent you in this transaction.
Hope this helps.
PS: Regarding Jacks comment on Dual or Office Agency, the laws vary from state to state. Some states have what is called Designated Agent which would allow two agents from the same brokerage to represent apposing sides without risk or liability on either side and with the assurance both parties were being represented appropriately.
I just want to make an important edit to Lori's posted comment . If you do decide to get another agent to represent you, make sure they are not from the same office as the agent helping you right now. Why? Because every agent in that office is listed under the same broker and is therefore considered to have the same dual agency relationship that you have right now. This should have been explained to you in detail at the very first opprtunity. If you want your own agent looking out for you, get an agent listed with a different broker.
As far as the appraisal is concerned, be careful not to get too emotionally attached to the house....yet. This is still business and another reason to have an experienced agent of your own to help you with the negotiation process. If you're willing to overpay for the house that is no problem. The bank will only lend on the appraised value though. The difference may be no problem or it may be worth it to do a bit of hard negotiating and be able to have money left over for additional unplanned renovations or furnishings. Good luck and have faith. I have seen deals fall through too many times where the buyers were crushed at first but ended up finding another property later on that handily beat all their expectations.
Jacobus "Jack" Vollenberg
RE Appraiser/RE Sales Associate
Vollenberg Appraisers/ERA Statewide Realty
First, I would take a deep breath and see if it does appraise. You may well not have a problem. Meanwhile, you can ask your Realtor friend to pull comparative sales for SOLD properties in the last 3 months, and also LISTED properties that have just been listed that are similar to the house you are looking at. Have your Realtor then delve in to look at how long those homes have been on the market. It might be much easier process with your husband if you have all the facts in front of you to make an informed decision, whether or not it appraises.