My Last Two Deals Die with the Appraisal
Note: This is not meant as a slam to the appraisers out there. I know you're under intense scrutiny and in good times and bad, you're job is always challenging.
Is it just bad luck or is this going to be a trend? I did all the comps for a recent contract I wrote for my buyers and based on that we made an offer to the seller. No magic there, just due diligence. The offer is accepted and it's starts the ball rolling towards closing. The buyer does all his inspections, gets the contract to lender, title agent and insurance agent. He gets a really great rate and the lender is happy with this deal.
Well, the step I usually welcome because it signals that things are going well has now become when I hold my breath these days. I know my market area inside and out. I know when an offer is too low or too high for the most part. What I can't figure out is where some of these appraisers get their comps. We have a problem in Fort Lauderdale where many of the appraisers come from the Miami-Dade area. Some are just not so familiar with this area. The neighborhood lines are very nuanced and if you don't realize that, it can result in poorly chosen comps. The sale was not a short sale or a foreclosure but two of the comps were foreclosures from over a mile away from the subject property. There were a few very similar homes with recent sales just a few streets away in the same neighborhood. I always make sure to get a copy of the contract to the appraiser for reference. I also have comps at the ready, some appraisers appreciate it and some refuse. Either way is fine with me.
The appraisal naturally came in well under the agreed upon price the buyer and seller negotiated and the buyer says he doesn't want the property if he has to make up the difference to the lender to get the loan - he was already putting 25% down. As was his right specified in the contract, he walked. Although I had proved to the buyer that the price was fair, he worried about being under-water as soon as he owned the property.
The property went under contract a week later and sold for a higher price than our contracted price. Happy for the seller, not so much for my buyer since he lost out on a house he really wanted.
Is this happening to anyone else more than before?
All comments are welcome...