Home Buying in Oakland>Question Details

Debi Stoliar, Home Buyer in Oakland, CA

Fearing appraisal... need advice

Asked by Debi Stoliar, Oakland, CA Wed Sep 26, 2012

After 9 long months of looking and about a dozen times of being overbid, I finally got into contract. The house is amazing! However, I am worried about it not appraising at my offer price. A lot of houses in the area have sold for quite a bit less. Are appraisers adjusting to the sudden booming market? Have a lot of deals fallen through because of low appraisals?

Help the community by answering this question:


Conclusion: the house appraised. Just over our offer price, hooray!

Transaction is moving, hopefully will have keys by next week. Thanks for everyone's sage advice!
0 votes Thank Flag Link Thu Oct 11, 2012

Looks like the gods are smiling on you. Enjoy your new home :)
Flag Thu Oct 11, 2012

Most sellers are fair and will work with you.

I just recently had my buyer's appraisal come in lower than their offer price --- the property is absolutely perfect for them, especially after seeing so many other properties and knowing they couldn't find anything better.

We also knew this appraisal was not perfect especially since the appraiser is from out of town and couldn't possibly have known the nuances of the area. But we are also aware of what an uphill battle it would be to challenge the appraisal. And everyone is running out of time due to moving dates for both parties. So we approached the seller who agreed to meet the buyers half way. All's well that ends well. It helped that both agents were dealing from a win-win angle and didn't turn this transaction adversarial.

Hope your final outcome will be the best one for all. Good luck.
0 votes Thank Flag Link Fri Sep 28, 2012
i wish i could help...sorry about that
Flag Sun Oct 14, 2012
I'm trying to stay positive about it. Truth of the matter is that the house was priced maybe a little on the high side (after looking at comps) but fair enough that they still got multiple offers over asking.

I bid 5.5% over asking and ended up being the backup offer. The people with the winning offer ended up backing out, and so we were offered the deal.

I have a week and a half until my appraisal, and then we have to wait for the report. It really helps to get opinions from the experts so I really appreciate all the answers. At this point all I can do is wait and keep telling myself that it's out of my hands (which drives me batty)!
0 votes Thank Flag Link Fri Sep 28, 2012
1) Appraisal continues to be a problem... but within limits. Recent closed sales and some pending sales give appraisers the "data points" they need to make the deal work. 2) Within the framework of the sales contract, having the appraisal come in at sufficient value can be a contingency (optional)... allowing the Buyer to withdraw from the contract or renegotiate with the Seller. 3) If appraisal is NOT a contingency, then a prudent Buyer should have additional cash available to increase the down payment while adjusting the loan-to-value ratio to satisfy the bank. As mentioned in other responses, it is common knowledge that the market is trending up... but at what rate? When the market was trending down (fairly recently), a second appraisal was often ordered if the escrow lasted too long... and value was lost since the original appraisal. It's always good to have your own closed sale data.
0 votes Thank Flag Link Fri Sep 28, 2012
How did you arrive at your offer price?

I you simply picked a figure that you thought would be a winner, you may have a problem. The appraiser needs to base the value of the property on comps. I you are willing to pay more than anyone else has been willing to pay for a comparable house in that neighborhood you may need to come up with cash to bridge the gap between your price and the appraisal valuation. If you can’t do that…well…that is why the contract contains an appraisal contingency. You will not be contractually obligated to make the purchase as long as the appraisal contingency is in effect.

Pacita has laid out the three potential that you might follow in her comment below.

I have seen many appraisals fall short of what a buyer has offered. I have also seen appraisals that came in at the sale price even when the price was surprisingly high.

I know this is a challenging market for buyers. I hope you are successful.
0 votes Thank Flag Link Wed Sep 26, 2012
The appraisal is not protecting you. It is protecting the bank. The bank has already pre-approved you for that particular purchase price ( with the necessary down payment , and DTi, etc etc) so financially they know you can afford the property. The appraisers ( not all I am sure but many) are indeed very conservative and do not have their pulse on the current market trend. So yes, you will most probably have an appraisal issues coming up, and be reminded, that their "finding" is kind of law. (although it is only one opinion of value). Appraisers can be and (perhaps even often) are wrong, particularly in a market turn around, like this one. As an example, having several offers over asking price does not seem to affect their finding. You may have to come up with more money down to obtain the property. Some banks work with a better appraiser "set" than others. I just worked with an extremely bad appraiser and appraiser company.
It is important to speak with the mortgage broker / banker and find out what appraiser company or appraisers they work with.
0 votes Thank Flag Link Wed Sep 26, 2012
This is not uncommon

You have options, depending on the results of the appraisal. If property appraised for less than your offer, you can negotiate with the seller
1. Ask seller to lower price per appraisal
2. Offer to meet seller halfway and reduce price accordingly
3. If there is no meeting of the minds, you can either walk away or come up with the difference

You can have a second appraisal or challenge the one you have (although that may be an uphill climb)

And yes, many appraisers are adjusting to the market.....and as properties close escrow, they may reveal several situations where the sold price is higher than list price....and therefore, "lift" some of the values to reflect current market trends
0 votes Thank Flag Link Wed Sep 26, 2012
Have you had your Realtor do a CMA?
You would know where you stand.

Look at it this way;
The Appraisal will be protecting you from paying too much.
You do have an APPRAISAL CONTINGENCY? right?

YES! a lot haven't met the appraisal.
0 votes Thank Flag Link Wed Sep 26, 2012
My agent pulled some comps, but I think some of them were short sales and foreclosures, many in poor condition. They were all quite a bit lower in price. It seems house prices have been literally shooting up like crazy. This house has been remodeled really nicely. So I don't know how comparable those comps really were.

Yes, we do have an appraisal contingency.

Unfortunately I couldn't make up the difference if it appraised low, I'm already getting a little help from my mother to put my 20% down. Have you found sellers to be open about renegotiating the price down if it appraises low? I would imagine they would come across this issue every time unless they get an all cash buyer, right?
Flag Wed Sep 26, 2012
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer