I recently had an appraisal come in low on a property. Loan was pretty much done. Missing appraisal and verbal verif of emloyment and it was set to close.

Than..... BAMMM!!!!  Appraisal came in over $8K short! DOH! 8/200 = 4% <== NOT a nominal amount.

I had the unfortunate task to tell the borrowers the property wasn't worth as much as they thought and that if they truly wanted it.... then they would have to come up with the difference. I informed them the dangers of 100% financing and property values. I explained to them that I haven't seen the property myself, and can't place a 'value' on it myself. But that in some markets and even in some neighborhoods that folks HAVE paid over appraised value. Reasons are numerous, like the best schools, ect. I also warned them that paying over appraised value is almost never the best course of action.

I then went on to explain to them that I would contact their realtor if they like. They said they needed to call her anyway and would take up the issue with her.... especially since she kept telling them how great of a deal they were getting on the home all along!! I told them they should expect the realtor to review the comps used by the appraiser because sometimes the MLS data can be wrong and there may be a couple more properties in the area that indeed are comps.... but missed by the appraiser because they were listed as being backed up to a golf course or the like. I told them that they do NOT need a new appraisal. That a 4% variance cannot be 'made up. (this was a $200,000 property). I told them to expect their realtor to stick up for them and re-negotiate the deal.

Mind you..... I generate my own referrals. So this client is MINE!!! Therefore, the first call is to who I am working for... my client, not the realtor in this case. I firmly believe a courtesy call to he realtor would be warranted if she was driving the business, but she had already rubbed me wrong anyway.

I get a phone call about 20 minutes later from an obviously shaken client. The realtor's only comment was: "We just need a new appraiser". Then, while talking to the client I get a call on another line.... from you guessed it.... the realtor. "Why the heck did I tell the client they didn't need a new appraisal when they OBVIOUSLY do...." "This is a beautiful house".... "Best on the block"... "this deal is fine, and doesn't need to be re-negotiated"

After listening to all of the reasons why this home should appraise, I finally relayed to the realtor that I am not a professional appraiser and have not seen the property. And that I don't really care how this gets handled.... that I can only give my clients data and let them decide for themselves.

Well... the deal DID get re-negotiated. Everybody happy. Closed 2 days later.

Think that realtor will ever get a referral from me or the buyer?

Moral of the story: 'Who's best interest should we be looking out for? Our commission checks? Or the clients transaction?'

A VERY similar deal just happend very recently that made me think about this ordeal. In this case, the realtor never blinked. She immediately got on the phone with seller's agent and made it right. <== Think THIS realtor will ever get a referral from be or the buyer? YOU BETCHYA!!!