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What Are My Options If My Warren County Home Doesn't Appraise?

By
Real Estate Agent with Transaction Alliance 513.520.5305 www.LizTour.com SAL.2002007747

Sale price and appraisals don't always matchWhat Are My Options If My Warren County Home Doesn't Appraise?

Fortunately, appraisal issues aren't very common in Warren County, but the possibility always exists that the purchase price for a home won't be met fully by the appraiser's valuation.  Now that can feel like a Code Red emergency because the whole deal is at risk, right?

But there are options!  The starting point is a close review of the appraisal report.  Did the appraiser accurately portray your home?  Miss that legal bedroom in the basement or some other key characteristic?  Maybe the county has your finished square footage badly underreported?  If something can be identified, the appraiser may be able to make the adjustment needed to bridge the gap.

The next area for review is making sure the comparable home sales are really the best comps available.  If not, an appeal may again close the gap.

Okay, what happens if the appraiser doesn't see grounds to move the appraisal?  There's the option of bringing in a 2nd appraiser, and obviously this will need to be coordinated with the loan officers.  Just because the 2nd appraiser gives a "better" number doesn't mean the back rooms of the mortgage makers are going to be happy.

Another option?  A change in purchase price/terms that makes the appraisal work.  That may mean the seller comes down to the appraisal price.  It may also mean some changes in what the seller was willing to leave behind or repair since there net has changed.

Or perhaps the buyer comes up with more cash out of pocket to hold the original purchase price (or maybe the buyer and seller split the difference at some mutually agreeable point, and that doesn't necessarily mean halfway).

And lastly, and this is the one no one really wants, the deal is off.  The financing contingency can't be met, and seller hopes for better luck next time, and buyer moves on to look for another home.

Bottom line, the importance of pricing correctly from the start is critical.  Failing the appraisal is hopefully not a deal killer, but it can be.

Serving Warren County's home buyers and sellers,

Liz and Bill aka BLiz

Posted by

Serving Warren County Ohio & Adjacent Areas

The Liz Spear Team of Transaction Alliance
Elizabeth Spear, ABR, Ohio License SAL.2002007747

William (Bill) Spear, Ohio License SAL.2004011109  Kentucky 77938
Ask for us by name if you visit the office!

EHO
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Liz Direct: 513-265-3004     
Fax: 866-302-8418

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Comments(13)

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

Hasn't happened with my buyers often, but when it did, the responsibility, IMO, goes mostly to the listing agent who doesn't do much if anything to assist the appraiser.

Mistakes in sq. ft. in the tax record shouldn't cause low appraisals because most appraisers take their own measurements anyway.  They know that tax records have a lot of errors. 

Sellers agentsshould meet appraisers, not tell them, "it's on lock box, go on in".  They should also provide the appraiser with documented paid receipts of recent upgrades, additions, etc. that aren't reflected in the tax record.

I could go on and on.  Bottom line is, low appraisals benefit buyers more than sellers.  In fact, before writing a contract, I try my best to make sure there's some equity in case the house doesn't appraise.

 

 

 

Oct 13, 2013 02:49 AM
Les & Sarah Oswald
Realty One Group - Eastvale, CA
Broker, Realtor and Investor

Hi Bliz,

Very informative blog for buyers. We been experiencing a few appraisals not coming up to the selling price. However, there is such a shortage of inventory that buyers are coming up with the difference. Most of these transactions are from investors who are looking for monthly cash flow and not worried too much about appreciation.

Oct 13, 2013 02:51 AM
Liz and Bill Spear
Transaction Alliance 513.520.5305 www.LizTour.com - Mason, OH
Transaction Alliance Cincinnati & Dayton suburbs

Lenn, We're fortunate (or unfortunate depending on perspective) that appreciation here is relatively low.  No wild swings, so rarely a problem with appraisals.

Sarah & Lester,  Good that your market can deal with the shortfall without it being an issue.  Thanks for the reblog!

Oct 13, 2013 03:25 AM
Anita Clark
Coldwell Banker Access Realty ~ 478.960.8055 - Warner Robins, GA
Realtor - Homes for Sale in Warner Robins GA

BLiz: You hit on the key factor to help the appraisal process go smoothly...price the home correctly from the beginning.

Oct 13, 2013 03:40 AM
Liz and Bill Spear
Transaction Alliance 513.520.5305 www.LizTour.com - Mason, OH
Transaction Alliance Cincinnati & Dayton suburbs

Anita, We've passed up listings because we knew there was no way to get the appraisal to make even if we could find a buyer foolish enough to over well above market value.

Oct 13, 2013 06:31 AM
Brenda Mullen
RE/MAX Associates - San Antonio, TX
Your San Antonio TX Real Estate Agent!!

I have rarely had problems with appraisals..in fact, only once knock on wood, but there are options for sure.  Another wonderful post BLiz :)!

Oct 13, 2013 08:53 AM
Liz and Bill Spear
Transaction Alliance 513.520.5305 www.LizTour.com - Mason, OH
Transaction Alliance Cincinnati & Dayton suburbs

Brenda, Thanks!  It's not really come up for us (well except for once personally when we tried to refi a few years ago, but no problem this year).

Oct 13, 2013 09:35 AM
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in Southern RI and beyond

BLiz, the latter option has never happened to me luckily...we've always been able to work it out...I have done the 2nd appraiser route a couple of times with no success ( i consider it the buddy system & supporting your appraiser buddy!) but have done the due diligence & challenged...yes and the price change is usually the option that results.

Oct 13, 2013 11:11 PM
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

Reaching for the wrong comp... and good luck getting a revisit once they have their fee, moved on. Going in supplying the comps that make sense, work best means help them do their job. Or the seller pays for another if bank allows when the first misses the limbo target of high enough to clear to close.

Oct 13, 2013 11:28 PM
Rebecca Gaujot, Realtor®
Lewisburg, WV
Lewisburg WV, the go to agent for all real estate

The appraisals usually come in really close to the listing price. In one I had that came in lower ($5k), the seller and buyer split the differenence.

Oct 14, 2013 03:11 AM
Liz and Bill Spear
Transaction Alliance 513.520.5305 www.LizTour.com - Mason, OH
Transaction Alliance Cincinnati & Dayton suburbs

Ginny, Fortunate here that we haven't had to deal with this directly, and hopefully it stays that way!

Andy, That was our personal experience when the appraiser totally missed the refi valuation on our home.  What he called comps were pretty far off, but he had no incentive to do it right.

Rebecca, I suspect in most cases that splitting would be what it would take.

Oct 14, 2013 07:08 AM
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Liz & Bill.  Your last sentence say it best.  Price it right when you list it.

Oct 14, 2013 08:27 PM
Liz and Bill Spear
Transaction Alliance 513.520.5305 www.LizTour.com - Mason, OH
Transaction Alliance Cincinnati & Dayton suburbs

Conrad, It will always offer the most likely path to avoiding appraisal issues.

Oct 14, 2013 08:43 PM