Appraisal was 16K under contract price. 2nd appraisal scheduled, but puts buyers outside the 30 day financing contingency. What next?

Asked by Melinda, Florida Sat Apr 16, 2011

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Tom Priester, Agent, Tequesta, FL
Sun Apr 17, 2011

So many factors that weigh into that answer. I am assuming that this is not an FHA loan as if so it would be unusual for a 2nd appraisal to be done as the initial appraisal will be attached to the property for a 6 month period. Please note that you if you do not move forward with this deal any other FHA financed contract that comes your way over the next six months will be required to utilize the same appraisal. If it is a conventional loan or cash deal and the buyer is paying for a 2nd appraisal that the lender (or buyer) will approve then hope the results are different from the initial valuation.

If the property does not appraise your options are that either you or the buyer must pay the difference or come to an agreeable split. The first thing you should do is have your Realtor® carefully review the appraisal with you to determine if there are in fact some reasons why the appraisal is not accurate which happens. If it is valid and your property is worth less based on recent sales than the purchase price you may be better off reducing the purchase price and moving on. So much has to do with your motivation and the market conditions surrounding your neighborhood. But if I was in your shoes the first thing I would want to dig into is the appraisal itself and get a clear picture of what the true market value of your home is.

I hope this information is helpful but if you need anything additional please do not hesitate to give me a call.

Always at Your Service,

Tom Priester e-PRO
"Results Driven Real Estate"

Keller Williams Realty
561 308-0175
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2 votes
Louise Warri…, , Lake Mary, FL
Sat Apr 16, 2011
Hi Melinda -- You should get an extension of the financing contingency period before it expires and while the buyer is still in the mood to sign it. Also, you should start thinking about the possibility that you are going to have to renegotiate the sales price. Most sellers are having to come down to the appraised value in order to keep the contract in force. Most buyers in this market are unwilling to pay the difference in cash between the appraised value and sales price (the way they did 5-6 years ago) in order to get the mortgage (if you choose to hold firm on your sales price). Also, if it's an FHA appraisal, it will stay with the property for, I believe, four months so you're going to have this problem with the next FHA buyer.

It is possible that the home was incorrectly valued, though it is rare for the appraiser to change her work and for the bank underwriters to accept the increased value if she does. Best of luck--I hope it works out for you. Let us know.

Louise Warring,
Coldwell Banker Residential Real Estate
1 vote
Terri Vellios, Agent, Campbell, CA
Sat Apr 16, 2011
What does your agent say?

Depending on the type of sale (regular, short or REO?) you may be able to work with an extension. The buyer apparently want's the property, and the value needs to justified for the buyer to get a loan (if they are financing). If the sale is not a traditional sale there may be a problem with the seller's bank extending the closing.

There isn't enough information for a clear answer. That is why seller's and buyers have agents, to help them through these unknown issues.

Good luck.
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0 votes
Debra B Albe…, Agent, Port St Lucie, FL
Sat Apr 16, 2011

Meet the appraisal price and close is the best solution.

The appraisal is going to stay with the property for 60 days.

So, basically you can sell at the appraised price or don't sell.

This just happened to us with well qualified buyers. The seller would not meet the price SO, we are back out tomorrow to find another house.

Debbie Albert,
Keller Williams
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