Despite what you have heard about the market nationally, West LA is still pretty strong. The median price in West LA is $844,000 compared with $733,750 February 2007. Prices have gone up. Sales volume have fallen in West LA about 50% though but prices are still up. Appraisers and banks are being much more careful and perhaps the appraisel was cut by the bank. Whatever the case if you really want this house you might consider having another appraisel ordered. Perhaps your lender can help with that. I would also advise you to ask your agent to do comps. Other than the appraisel coming in low, you as a buyer and your agent should ask yourself, compared to the other properties you have seen, is this a $925k house? There are many factors why it might now have appraised. The apraiser might have not been familiar with the home. There might not be any comparable properties that are recent sales. Whatever the reason I think your best bet is to ask you agent to review the comps and see if they support another appraisel. If that appraisel comes in low you will have more fuel to ask for the seller to come down a little om the price.
If the home is higher priced then you are comfortable with you have no choice but to start looking again.
Personally, I am suprized at the situation...all of my sellers are more then willing to negotiate and they have their homes listed at below market!
The price differential between the offer price and the appraised value is too high for any type of commission help of either agent. The seller has to see reality if the appraisal is truly correct.
I left corporate america because after years of working long hours and dealing with constant management changes, I wasn't getting the satisfaction or the feeling of achievement from my position anymore. I also was capped financially no matter how hard I worked.
In real estate, I can help my buyers and sellers make decisions that will help them build their wealth and enjoy a better quality of life. It's very satisfying and rewarding in a lot of ways.
Thanks for responding. I appreciate it.
Obviously, Iâ€™m in camp number 2. Walk away. The worst that could happen is the buyer, fearing the [lower] price and appraisal a re-listing would bring, will come down to the appraisal price after you call his bluff.
In all negotiations, you need only do two things to get what you want.
2) Politely say, â€œNo.â€
Youâ€™ll be surprised at the funny things that ensue. This works best when buying cars and houses.
If comps support the purchase price, a second appraisal is in order. I would suggest that your agent request the seller agent provide comps that the listing agent and seller believe support the value. Review that data with your buyer agent, along with other comps your agent can pull for you. Ask your agent to pull comps not only from the MLS, but also from the tax records for private sales.
If the comps do not support the purchase price, ask your agent to request a meeting w/ the seller and seller agent. The seller agent will have an appraisal problem with any offer if comps do not support.
If comps do support the contract, ask for another appraisal, at the lender's expense.
I would ask my realtor to run the most recent comparables to see if the appraisal is correct. Many times, banks send out appraisers that are unfamiliar with the area or are under pressure to come in at the lower end of the range due to the tightened guidelines that the bank insists on.
If your Realtor is able to justify the price, you (your and the listing realtor) can appeal the appraisal by providing the additional comparable for review and/or possibly request a new appraiser to come out for a 2nd opinion.
If the prices have truly fallen this significantly and you can "live" without this home, I would pass it up.
Sometimes, the sellers stay strong until they see that you are serious about backing out and will change their mind or possibly negotiate a middle ground that would make both you and them happy.
Remember, this seller will need to deal with this issue sooner rather than later. The next buyer will have the same concerns as you. The market is down trending now in most areas. It's not advantageous for the seller to lose this deal right now and wait/pray for someone else to come along with a lot of cash.
Good luck with this escrow!
A house is only worth what a buyer will pay for it. $75k is a huge difference in price. Where did the listing agent come up with the pricing for this property? I would think that both agents would be scrambling right now to figure this out.
All the best to you!