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Well our house didn't appraise....
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BigB
C & J are 10!
Member since 6/05 5914 total posts
Name:
Stacey
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Well our house didn't appraise....
I knew the price was a little high but the appraisal came in 110,000 less....now what?
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Posted 5/7/14 5:50 PM  |
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Prudential Douglas Elliman Real Estate
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MrsB12614
LIF Adult
Member since 4/14 1986 total posts
Name:
Mrs
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Well our house didn't appraise....
Your current home you own or is it the house your purchasing?
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| Posted 5/7/14 6:19 PM |
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BigB
C & J are 10!
Member since 6/05 5914 total posts
Name:
Stacey
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Re: Well our house didn't appraise....
Posted by MrsB12614
Your current home you own or is it the house your purchasing?
This was a house that we wanted to purchase. I knew it was a little over priced, but I didn't think we would be that far apart.
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| Posted 5/7/14 6:23 PM |
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Re: Well our house didn't appraise....
I guess the first thing is - Do you know whether the appraisal can or should be challenged?
Is there a realtor involved here? Because $110K short is a big difference. If I think an appraisal will even remotely be close, I will make my client aware that it COULD be an issue (regardless of whether my client is a buyer or seller). I don't know what the price was, but this would make a little more sense if this is a 1.5 million dollar home that appraised for 1.4 (as opposed to a $400,000 home that appraised for $290,000!). But it's still surprising that the negotiated price is so far above the appraised value.
Honestly, unless the appraiser was way off base (used homes in a different school district, for example, or used much smaller homes on much smaller properties), it's not even worth it to attempt to challenge the appraisal.
Typically, when an appraisal doesn't come in, either the seller comes down in price, and/or the buyer brings some more cash to the table. It usually is a little of both... a compromise, so to speak. If you are getting a mortgage, and the seller won't come down to the appraised price (and you can't bring more cash, and I am assuming you don't have $100K+ lying around), then the deal will fall apart.
If you are paying cash, then you don't have to worry about the loan, but still - do you want to pay over $100K more than market value for the house? Most people wouldn't.
I think you need to discuss this with your lawyer and agent (if you have one), but you should really try to negotiate the price down with the seller now that the appraisal came in so low. Assuming your appraiser used valid comps and is not WAY out of whack, the seller has to understand that this issue will likely come up again and again. It's not even close! It's not like the appraiser came in $5K under and another appraiser might bring it in at full value. So if the seller doesn't renegotiate with you, they will just lose time by putting it back on the market and then winding up in the same position with another buyer. The appraisal will be a hurdle for any buyer getting a mortgage. (Or waiting for a cash buyer, but a cash buyer usually wants a discount and won't want to overpay at such a premium anyway.)
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| Posted 5/7/14 7:26 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Well our house didn't appraise....
How much is this house? It has to be quite a bit for an appraisal to be 110k off. Maybe close to 1.0M?
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| Posted 5/7/14 8:13 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Well our house didn't appraise....
Posted by Century 21 Dallow - Christine Braun
I think you need to discuss this with your lawyer and agent (if you have one), but you should really try to negotiate the price down with the seller now that the appraisal came in so low. Assuming your appraiser used valid comps and is not WAY out of whack, the seller has to understand that this issue will likely come up again and again. It's not even close! It's not like the appraiser came in $5K under and another appraiser might bring it in at full value. So if the seller doesn't renegotiate with you, they will just lose time by putting it back on the market and then winding up in the same position with another buyer. The appraisal will be a hurdle for any buyer getting a mortgage. (Or waiting for a cash buyer, but a cash buyer usually wants a discount and won't want to overpay at such a premium anyway.)
It really depends on the cost of the house to see what percentage off the price is. I have had an appraisal challenged when I was the seller, I won and the buyer ended up paying the original offer price. The appraiser did not have access to the most recent pending listings and they ended up using those that the listing agent was able to provide.
Don't assume this issue will repeat itself with another buyer. More houses can go pending and more can sell during that time.
Message edited 5/7/2014 8:33:31 PM.
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| Posted 5/7/14 8:15 PM |
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Re: Well our house didn't appraise....
Posted by ave1024
Posted by Century 21 Dallow - Christine Braun
I think you need to discuss this with your lawyer and agent (if you have one), but you should really try to negotiate the price down with the seller now that the appraisal came in so low. Assuming your appraiser used valid comps and is not WAY out of whack, the seller has to understand that this issue will likely come up again and again. It's not even close! It's not like the appraiser came in $5K under and another appraiser might bring it in at full value. So if the seller doesn't renegotiate with you, they will just lose time by putting it back on the market and then winding up in the same position with another buyer. The appraisal will be a hurdle for any buyer getting a mortgage. (Or waiting for a cash buyer, but a cash buyer usually wants a discount and won't want to overpay at such a premium anyway.)
It really depends on the cost of the house to see what percentage off the price is. I have had an appraisal challenged when I was the seller, I won and the buyer ended up paying the original offer price. The realtor did not have access to the most recent pending listings and they ended up using those.
Don't assume this issue will repeat itself with another buyer. More houses can go pending and more can sell during that time.
Yes, but the OP is the buyer, so I think it's in her interest at this point to try to negotiate with the seller to bring the price down in line with the appraisal. She can use the arguments -- that the appraisal could likely be an issue again, that the seller will lose time putting it back on the market and waiting for another buyer -- for leverage, whether or not they airtight, infallible arguments.
And as far as pending sales - both realtors and appraisers both do actually look at pending sales when assessing value. I've had appraisers call me, many times, to find out the sale price of one of my "under contract" listings, because they were working on an appraisal of a home in the area. And when I pull comps for an appraiser, I will always pull some "under contract" ones.
Plus, in a higher end market, there is usually LESS inventory selling and FEWER pending sales, so I wouldn't count on a lot more homes closing to make the appraisal come in. Plus, in most areas of LI, sales are up in the 5% (ballpark) range in a year over year comparison. So unless the house is in an area where prices are skyrocketing (and that's not the case even in the really in demand areas), I think it's far-fetched to think that in a month or so, a house that appraised for $900,000 (based on valid comps) will suddenly appraise for $1 million plus.
But you did make me consider a point I hadn't before -- And that is: I do think the appraisal may be more susceptible to challenge in a high end market. I currently have a $1.3 (+) million home under contract (well, one of my buyer clients does) in a small north shore enclave, and it was more difficult to comp out that home (when we were strategizing about offers/negotiations), because the comps are scarce and the homes are more unique and custom... and therefore the value is more subjective and open to interpretation than say an area like Levittown, where you have lots of sales of similar homes.
Without knowing all of the facts, though, I still think that the fact that it didn't appraise needs to be looked at and addressed with the seller. The fact that the appraisal came in under matters more than the amount. If it's a $500K house coming in $50K under or a $1 million dollar house coming in $100K under (or a $250K house coming $25K under), the problem is still the same. And the options (of renegotiation -- seller comes down, buyer kicks in more cash, or a little of both, of challenging the appraisal, or of letting the deal die) are the same.
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| Posted 5/7/14 8:50 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Well our house didn't appraise....
Posted by Century 21 Dallow - Christine Braun
Posted by ave1024
Posted by Century 21 Dallow - Christine Braun
I think you need to discuss this with your lawyer and agent (if you have one), but you should really try to negotiate the price down with the seller now that the appraisal came in so low. Assuming your appraiser used valid comps and is not WAY out of whack, the seller has to understand that this issue will likely come up again and again. It's not even close! It's not like the appraiser came in $5K under and another appraiser might bring it in at full value. So if the seller doesn't renegotiate with you, they will just lose time by putting it back on the market and then winding up in the same position with another buyer. The appraisal will be a hurdle for any buyer getting a mortgage. (Or waiting for a cash buyer, but a cash buyer usually wants a discount and won't want to overpay at such a premium anyway.)
It really depends on the cost of the house to see what percentage off the price is. I have had an appraisal challenged when I was the seller, I won and the buyer ended up paying the original offer price. The realtor did not have access to the most recent pending listings and they ended up using those.
Don't assume this issue will repeat itself with another buyer. More houses can go pending and more can sell during that time.
Yes, but the OP is the buyer, so I think it's in her interest at this point to try to negotiate with the seller to bring the price down in line with the appraisal. She can use the arguments -- that the appraisal could likely be an issue again, that the seller will lose time putting it back on the market and waiting for another buyer -- for leverage, whether or not they airtight, infallible arguments.
It's definitely in the buyer's best interest to try to get it down. HOWEVER the seller has no obligation to lower the price. If one buyer was willing to pay that price, another buyer likely will. Buyers dictate the market. Not appraisals.
I hear this alot on this site that "it's going to happen again to a seller so the seller needs to lower the price". They most definitely do NOT have to lower the price. It really depends on how quickly an offer came in after the house was on the market.
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| Posted 5/8/14 7:45 AM |
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BigB
C & J are 10!
Member since 6/05 5914 total posts
Name:
Stacey
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Re: Well our house didn't appraise....
Here is the issue with the house. We agreed to the purchase price of 580,000. The house appraised at 470,000.
In this area, there are very few houses that sell. They are passed on within families, so the comps are far and few between. I knew it may not appraise, but I didn't think that it would be this drastic of a difference.
We hope to go back to the table and negotiate. However, I know it may not work out. And, the seller has learned a lot about their house on my dime and time. This part annoys me.
The crazy thing is that there is another house on the market for 850,000 a few blocks away. It is nicer and bigger, but I know that won't appraise either and I feel like letting those people know.
thanks for everyone's feedback! I really do appreciate it!
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| Posted 5/8/14 11:51 AM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Well our house didn't appraise....
Posted by BigB
Here is the issue with the house. We agreed to the purchase price of 580,000. The house appraised at 470,000.
In this area, there are very few houses that sell. They are passed on within families, so the comps are far and few between. I knew it may not appraise, but I didn't think that it would be this drastic of a difference.
We hope to go back to the table and negotiate. However, I know it may not work out. And, the seller has learned a lot about their house on my dime and time. This part annoys me.
The crazy thing is that there is another house on the market for 850,000 a few blocks away. It is nicer and bigger, but I know that won't appraise either and I feel like letting those people know.
thanks for everyone's feedback! I really do appreciate it!
I am curious what area is this? (FM me if you don't want to post it here)
That's a large difference. If prices are heading up, it may just take time for the appraisals to catch up to the offers.
Does the price per sq/ft match up to the other houses?
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| Posted 5/8/14 1:32 PM |
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JDubs
different, not less
Member since 7/09 13160 total posts
Name:
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Re: Well our house didn't appraise....
My BIL has this problem too. He dormered his house so its a lot larger than other capes in the area, they use comps from the surrounding area when doing his appraisal, but nothing is quite like his house (there are some but they are far and few in between) so he doesn't feel like its a fair assessment.
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| Posted 5/8/14 2:35 PM |
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MikesWife
Wanting...........
Member since 1/06 6887 total posts
Name:
Karen
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Re: Well our house didn't appraise....
Also, read the appraisal thoroughly. Our appraisal came in short by like $13K. I read it and he had it down as a 3 bedroom house. It is clearly 4 bedrooms - even his drawings acknowledged it as 4 bedrooms. Where he did the comp adjustments, however, he showed 3 bedrooms. We challenged it and he went back and made the corrected adjustments.
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| Posted 5/8/14 3:50 PM |
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