sold house for full asking price 1st day on mkt , but deal fell thru with low appraisal $55K less -- is there a creative way around this problem?

Asked by Margaret.bremer, Morristown, NJ Thu May 10, 2012

other than finding a cash buyer. -seems a shame buyers want to pay but banks won't make loan.

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8
Jeanne Feeni…, Agent, Basking Ridge, NJ
Mon May 14, 2012
Hi Margaret, I too had a similar scenario - I was representing buyer and we all knew that we may face a tight appraisal heading in to the transaction and the buyer was comfortable proceeding with an underappraisal up to a point. In fact the home did under appraise but by less than half of your number - $55,000 is quite a difference. In my case, the buyer's substantial cash down payment made it workable, but if less cash were involved, it would not have been an option. The banks have ratios that must be sustained and if an underappraisal upsets those, then either the price must be reduced or the buyer must come to the table with more money. And while you may get a second appraisal, unless you can make a strong case that the comparables do not support the appraisal AND you get very lucky, it is unlikely.

My suggestion is to try very hard to hold on to your buyer and negotiate so that the financing will work.

Good luck to you,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
1 vote
Jeanne Feeni…, Agent, Basking Ridge, NJ
Tue May 15, 2012
I just had a transaction fall apart as the price escalated over asking and the seller wanted assurances that the buyer would proceed regardless of appraisal. Can't help but caution sellers on the potential uneasiness on the part of a buyer if the home underappraises - essentially that is an objective source opining on the value of the home. If it falls short of what you have agreed to pay, it can really undermine the buyer's confidence and enthusiasm -- even if they agree to pay the difference and have the resources to do so.

Best,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
0 votes
Joan Congilo…, Agent, Freehold, NJ
Mon May 14, 2012
If the deal already fell through there really isn't much you can do about it at this point. However,you might want to consider having your realtor do a current market analysis on your home with just closed sales from the past 3 months and adjust your asking price accordingly so that this doesn't happen again. If you are not willing to take less for your home than you may have to wait for home value to rise in order to get your price and have it appraise for $55,0000 more than its current value
0 votes
Debra (Debbi…, Agent, Livingston, NJ
Sun May 13, 2012
Margaret, the short answer is............there is very little you can do, creatively, or otherwise, other than reduce the price to reflect what the appraisal indicated.

The buyers might work with you a little bit if they have the ability to put down more money........but buyers can be turned off very easily by a lower appraisal.

In addition, the buyers do not have to allow - even if the bank would - another appraisal..........$55,000 is a sizable difference.

I am curious, though...........How did you arrive at your list price?
If you are working with an agent, then you might want to revisit the comps used..............if you are a fsbo, then you will still need to revisit that list price and the comps!

I understand your frustration that the buyers are willing to pay the price, but the bank sees the value differently.
Unfortunately, this is the new world we live in as far as mortgages are concerned.

Best wishes.......
0 votes
Shashi Gupta, Agent, Mountain Lakes, NJ
Sun May 13, 2012
Recently I had a same situation with my client where Seller end up reducing the price to the appraisal value . Comps must justify the fairmarket value for the house within 3 -6 months. Realtor must produce comps to the appraiser to justify. Or take opinion from second appraiser. Buyer do get scared in this situation.
0 votes
Helene Jeane…, Agent, Metuchen, NJ
Thu May 10, 2012
Congratulations. The hard part is done! The alternatives that Diane recommended are certainly viable options. I'm going to suggest a different approach first. Your agent arrived at your list price by doing a comparative market analysis. He/she should have the data that proves what comparative properties have recently sold for. Compare with the properties the appraiser used. Are they same or similar? If not, I'd ask your agent or attorney to communicate the comps to the appraiser. Maybe...and it is a maybe, they would look and listen. Wishing you good luck!
0 votes
Diane Glander, Agent, Spring Lake, NJ
Thu May 10, 2012
Sorry to hear about your appraisal problem. It happens quite frequently. There are things you can do:
As the seller, you can order another appraisal. If you do, you need to make arrangements with the buyers before the appraisal comes in as to how you will handle it--will their bank accept another appraisal, what if it comes in for more?
You can offer to split the difference if the buyers have enough of a down-payment and the bank agrees on the new price.
You can reduce the price of the house. (If one appraiser comes in $55K under the sales price, you might find that the next one will to.)
Cash buyers generally will negotiate to a price lower than asking because they know cash is king!
Web Reference:  http://www.dianeglander.com
0 votes
Albert Baron…, Agent, Chatham, NJ
Thu May 10, 2012
You are just going to have to work it out with the buyer. The bank might be able to up the appraisal a few thousand, but that's about it. You also need to make sure that the appraiser was local and not out of market. If the appraiser is unfamiliar with the area then they might not know all of the comps.
The good thing is that you got a buyer !! be negociable....the buyer will just move on and you will have lost your chance to sell.
0 votes
The new market data for April just came out this morning. The data suggests a increase in home sales albiet $500,000 and lower. The inventory is down a lot which is the reason you can not find a suitable home. Be patient and as the market starts to pick up, more sellers will list their properties and this angst you are feeling will pass quickly.
Flag Fri May 11, 2012
seems such a shame that 2 buyers first day of showing were willing to pay that price!! so hard to now settle for less just due to the banks subjective appraisal. ugh!
Flag Thu May 10, 2012
We had a backup offer as well but we were in shell shock with what had transpired. We are likely going to FSBO to try and recupe some of the money and we have yet to find a house we love to move into -- this would all make better sense if we could just FIND somethign to buy and get the discounted market prices as well.
Flag Thu May 10, 2012
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