The estimate from the appraiser is less than half of the inspector or contractor. Which do we go by? Can the buyer be expected to contribute?

Asked by Jeannette Polfus, California Wed Aug 10, 2011

I never used the fireplace as I had two persons in wheelchairs living in the house with me and they asked me not to use it. One person was my mother. I did not know about it's condition, and said so in disclosure.

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Deborah Garv…, Mortgage Broker Or Lender, San Diego, CA
Wed Aug 10, 2011
The agents here have done a great job of answering your questions about negotiating with the buyers the costs of fixing/repairing the fireplace. However, be aware that the lender may require the fireplace to be repaired (they certainly will if there is any defect or structural issue). If that is the case, the fireplace will most likely need to be repaired before any lender will finance the property. Discuss this with your agent as you may want to keep these buyers as opposed to re-selling the property. Best of luck!
2 votes
Jeri Creson, Agent, Studio City, CA
Wed Aug 10, 2011
I'm assuming you're saying that the deduct in value that the appraiser gave for a non-functioning fireplace is less than the actual cost of repairs. That's because the appraiser is looking for how a property condition affects value, not necessarily the cost to repair it, dollar for dollar.

Seller repairs are negotiable. The buyer has the right to REQUEST repairs, and certainly may choose to walk away from the contract if you say no - however, the seller has the right to say no, release the buyers deposit and allow them to walk away. In reality, now that you know you have a problem, most likely any buyer will want some sort of repair credit or have the problem fixed. Will it be as much as the cost of the repairs? Maybe. Will the next offer be lower to start with, and you might lose way more money than the cost of full repair? Possibly. That's part of the risk a seller takes on when saying no to repairs.

Make an offer to the buyer to credit part of the cost, and they can take on the rest. If they say no - perhaps consider paying the cost. But do get several estimates. Fireplace repairs can be ALL OVER THE PLACE - ranging 50% or more in their estimates.

Best of luck to you -
2 votes
Don Tepper, Agent, Burke, VA
Wed Aug 10, 2011
Use the appraiser's numbers if you're talking about the value of the property.

You also can ask your Realtor to do a CMA--looking at the comps--and see how that figure compares with the appraiser's.

Neither the inspector nor the contractor is qualified to estimate the value of a property. The inspector will look for deficiences and may be able to offer a ballpark estimate of what it'll cost to make the repairs. The contractor will look at those same deficiences and should be able to offer a reasonably accurate estimate of what it'll cost to make the repairs.

On the other hand, the appraiser is not qualified to estimate the cost of repairs.

I'm assuming the fireplace (or the chimney) has some defect uncovered by the inspector. In that case, the most reliable figure for making the repairs would be from the contractor. However, for your own protection, get 3 estimates for the repairs. Depending on what the issue is, there may be a number of different ways to fix the defect. And even with just one method, estimates can vary greatly.

If you want the buyer to contribute to repairs, you can ask. Or let's say the repairs will cost $1,000. You can offer to pay $500 towards the repairs. Effectively, then, you'd be asking the buyer to "contribute" the other $500.

Hope that helps.
0 votes
Billy Lam, Agent, San Marino, CA
Wed Aug 10, 2011
I agreed with Emily. Your obligation as a seller is to disclosure everything on the Transfer Disclosure Statement (TDS). As for the fireplace, the buyer may want to hire a fireplace specialist to determine its condition. The inspector and the contractor might have given their own OPINION of what your home value may be but they are not the appraiser. The appraiser based his/her report on recent homes sold in your area that are similar to yours. If the buyer is going to borrow money from the lender to purchase your home, the lender will go by the appraiser's report.

I wish you the best in your home selling process. Feel free to post your questions here or contact one of us.
0 votes
Emily Knell, Agent, Huntington Beach, CA
Wed Aug 10, 2011
I don't really understand your question.

The inspector & the Contractor are not Real Estate appraisers. Are you saying that they are giving you an opinion of value that is less than half of what the appraiser is saying the home is worth?

Regarding the fireplace, if you didn't know that it did not work & that's how you reported it on your Transfer Disclosure Statement, then you did the RIGHT thing. You're not a contractor, you never used the fireplace & you didn't know it wasn't working properly. You don't have to fix it if you convey to the buyer that the home is being sold in As-is condition.

If the appraisal came in short of the purchase price you & the buyer agreed upon, then there needs to be some re-negotiation. In this kind of market it is unlikely the buyer will bring in the cash needed to cover that difference. No one wants to pay over market value.

Shoot me an email directly if I didn't quite answer your question & I'll be happy to help you further.

EmilyKnell1@yahoo.com
562-430-3053 c
Realtor Since 1996
Main Street Realtors
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