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Low appraisal

By
Real Estate Agent with Rodeo Realty

 

What can you do if an appraisal comes back too low?

 

Imagine you get an offer on your home after going back, and forth you finally agree on a contract with a buyer. So far everything is going smooth. Until you get to the appraisal. You now hit a little turbulence. The appraisal comes back, and it is too low. You're starting to get nervous that this deal is going to fall through.

 

What can you do? How can you save this deal?

 

Here are four suggestions on what you can do to help save this deal

 

•1.     Talk to the Appraiser - Find out why he came up with what he did. Maybe he over looked something, or didn`t have all the proper information. It is possible, that maybe he made a typo, or maybe he never saw the permit for the addition that you did. He might not have all the proper information. Just by talking to the appraiser, you just might be able to fix the problem.

•2.     Talk to the bank - Ask the bank if they could have the property reappraised by another appraiser.

•3.     Hire a new appraiser - If the bank won`t have the property reappraised hire a new appraiser, and then give that new appraisal to the bank. One word of caution here, Just because you hire a new appraiser doesn`t mean that the bank will accept it.

•4.     Renegotiate
 The secret here is to keep the deal together. This is going to take either one, or both parties to be flexible. The buyer can come in with more down payment money to make up the difference; the seller can be willing to come down in price to make up the difference. The seller can take back a second on the house. Any one thing, or combination of things can save the deal, and isn`t that the bottom line. I think so, but only if it is fair to both parties.

Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Hopefully, the buyer was protected with an "apprsisal contingency".

Hopefully, the listing agent met the appraiser to protect his pricing with comps.  That can often make THE difference.

As a buyer's agent, when we get a low appraisal, we want the house for that price.  No buyer wants to pay over appraised value for a property, especially in a falling market. 

As a seller's agent, I would be encouraging the seller to meet the appraised price because the next one could be lower.

 

Jul 01, 2007 12:06 PM
Laurie Mindnich
Centennial, CO
I knew right at the first line, before seeing the name, that this was a Lenn response.  Nothing to add.
Jul 01, 2007 12:12 PM
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate
I agree with Lenn. I always add an appraisal contingency to my buyer's contracts.
Jul 01, 2007 12:15 PM
Joe Zapata
Keller Williams Realty Media World - Burbank, CA
Your Burbank Real Estate Expert
I agree with Lenn as well.  Protect your client with an appraisal contingency.  If they will not conceed to lower the price accordingly.  Let them get a second appraisal if they want but do not remove contingencies until it comes in and all parties concur.  If they try to push with a notice of buyer to perform back out and run.  Let someone else deal with the problem.
Jul 01, 2007 04:03 PM
J Perrin Cornell
Coldwell Banker Cascade Real Estate - Wenatchee, WA
Broker, ABR, VAMRES

Well, I'll join the chorus!

As a listing agent I often take time with the appraiser. So much so that I find appraisers in the area call me if they are having problems. It is important to encourage these types of relationships... you never know when they might come in handy.

Jul 02, 2007 02:30 AM
Dan Tobias
Rodeo Realty - Northridge, CA
Northridge Real Estate Expert

Sorry everyone I guess that I should have mentioned the appraisal contingency. I just assumed that everyone knew that it was in the contract

Thanks for pointing it out

Jul 07, 2007 06:17 AM
Pablo Santibanez
Buildalegacygroup - Santa Clarita, CA

Hi Dan, 

I agree with Lenn,

Don't leave it to chance many agents make the assumption that the appraiser is from the area.  Many national lenders use out of area appraisers who may not know your market as well as you.  I often hear agents say "That's not my job" to provide the appraiser with comps. HUGE MISTAKE!!!  It is the listing agents job to point out the addition and provide the "permit" at the appraisal inspection.  Time is of the essence.  Be PROACTIVE!!!

If you do hire another appraiser make sure he is approved with the lender you are using.  They could be  "blacklisted" by the lender which will be another $350.00+- out of your clients pocket and another time waster for all!!!

 

Nov 26, 2007 05:04 PM
Anonymous
Eric Williams

Both my realtor and I were informed in writing that I could purchase a home for a certain amout.  We proceded to find a home.  I then found a home and an appraisal was ordered.  This appraisal was not stoped even though my loan was denied prior to the appraisal being done.  How do I get a refund.  I feel that I should not pay for this appraisal fee because the loan was denied first.

Eric.

May 15, 2008 04:30 AM
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