Home Buying in Los Angeles>Question Details

Leigh, Home Buyer in Culver City, CA

we just found out that the house we put an offer in on in West Los Angeles appraised lower than the

Asked by Leigh, Culver City, CA Mon Mar 17, 2008

purchase price ($925K vs. $850K). The seller will not budge from his price & thinks the appraisal is low. If we proceed, we are aware of the ramifications regarding the loan and that there are buyers who do put up the extra cash or proceed with the purchase via other options. So, the big question is, considering the market we are currently in, is it at all wise to proceed with the purchase or should we just move on?

Help the community by answering this question:


move on
this house will be 20% less in 2009


good luck
3 votes Thank Flag Link Wed Mar 19, 2008
S, I was just reading your answer. Not all the real estate agents will throw in their commission. I don't know about you, but I work hard for my clients. When I was in corporate America, I don't remember ever having to throw in part of my salary when a vendor or client decided to leave. I wonder do you throw in part of your salary when your employer asks? Just curious...
2 votes Thank Flag Link Wed Mar 19, 2008
Hello Leigh,

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.


2 votes Thank Flag Link Mon Mar 17, 2008
Actually, that is a question that only you can answer. I'm sure your realtor has shown you a CMA of the area. Is it really overpriced. or has it apraised low because of current market conditions? Will this home come back in value, once the market adjusts?
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!
1 vote Thank Flag Link Thu Mar 20, 2008
You do what you have to do to make the deal go through - in my self owned business I have often thrown in extra to close a deal. In my employer relationship I have often given up a bonus or not had a salary increase (as others in the company have done during the down times. If the company went under where would we be then?. And of course brokers don't really have to give up their commission, the buyers agent, who is the experienced one in negotiating, just really needs to push the seller to get real. But what I have found is that the agent would rather take the easy way out and have the buyer come up with more or give in. Maybe in this instance the sale just won't happen - why should a buyer take a property for more than the appraisal? And if the seller won't budge then maybe they need to wait to sell until the market turns around. Of course if that happens there will be no commission for anyone - something might be better than nothing. By the way - why did you leave corporate america?
1 vote Thank Flag Link Wed Mar 19, 2008
Be strong. The seller doesn't want to start over - it will probably appraise for less next time around. Call the bluff. And the real estate agents can always through in some of their commission to close the deal if that's what it takes. There is no reason why the buyer always has to give in. That is why there is an appraisal contingency.
1 vote Thank Flag Link Tue Mar 18, 2008
My opinion would be to move on unless this is the absolutely a 'must have' home for you or if you can see yourself in the home for more than 5 years. Although West Los Angeles is a sought after area, I don't see you overcomming a $75,000 deficit. Move on..your saving grace is that there is a lot of inventory out there for you.
Web Reference: http://www.hugotorres.com
1 vote Thank Flag Link Mon Mar 17, 2008
S, agree with what you said... there's a lot that can be done by both the seller's and the buyer's agent to ensure that the seller understands the reality of the situation which the seller will face should this deal not go forward. The same with the buyer understanding the options and choices that she can make in this transaction. Both agents ability to consult and negotiate will most like make or break this sale.

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.
0 votes Thank Flag Link Wed Mar 19, 2008
Funny, the dichotomy of answers here. Realtorsâ„¢: Order another appraisal. Just lookers: Walk away.

Obviously, I’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.

1) Smile.
2) Politely say, “No.”

You’ll be surprised at the funny things that ensue. This works best when buying cars and houses.
0 votes Thank Flag Link Tue Mar 18, 2008
No market is completely insulated in this correction, it's just a matter of time. Unless you have a special need to live in this home, the current market conditions is the perfect opportunity for buyers to pick and choose.
Web Reference: http://www.condostorela.com
0 votes Thank Flag Link Tue Mar 18, 2008
If this property goes back on the market, the seller and his/her agent will be asked, "Why did the deal fall apart?" The seller should really give this consideration before making a decision.

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.
0 votes Thank Flag Link Mon Mar 17, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
Hi Leigh,

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!
0 votes Thank Flag Link Mon Mar 17, 2008
Leigh, I would order another appraisal. Talk to your Realtor and ask him/her to run a comparative market analysis for you so that you can see what other comps can be used for the appraisal.

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!
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Mon Mar 17, 2008
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