Real Estate Agent with Long & Foster Real Estate, Inc. 608255





Are you thinking of selling your home? Even though you and the buyer may come to an agreement on the price, it is not uncommon in today's real estate market for an appraisal to be lower than the agreed upon contract price. When this happens, the buyer may no longer qualify for the loan amount and the deal can fall apart. What exactly does this mean and how does this happen?


Due to many short sales and foreclosures driving down appraisals, the above scenario has become somewhat common. Also, the Home Valuation Code of Conduct or HVCC that went into effect May-2009 has compounded the problem. The HVCC prohibits Fannie Mae and Freddie Mac lenders from having direct contact with appraisers. As a result, most lenders have started to work with appraisal management companies whose appraisers often have limited training or are not familiar with the area. So what is a seller to do?

Get an appraisal before listing your home. Be certain to use a local, qualified appraiser with a residential appraisal certification and is a member of the Appraisal Institute. This can also serve as a way to determine a realistic listing price for your home. This prelisting appraisal can be given to the buyer's appraiser and is often appreciated. A true professional will understand that as a property owner, you are only trying to provide as much data as possible.

Working closely with me, a professional Realtor familiar with your neighborhood can help you avoid many pitfalls before they occur leading to a higher price and faster closing. If you would like any additional information or are looking to buy or sell a home, call me. 

I am now offering the Pre-listing appraisal with all my listings as an added service to my already 21 point marketing plan to sell your home...   So if you are thinking of selling your home, call me today at 240-483-7556, no obligation.


Coni Otto - Long & Foster Real Estate, inc.   Licensed in DC, MD, and VA

Office: 301-384-8700

Cell: 240-483-7556






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Comments (2)

Candy Miles-Crocker
Online Real Estate Agent Training - Chevy Chase, DC
Realtor - Real-Life Real Estate Training

Quick question, you say that if a property appraises for less than the contract price the buyer may no longer qualify to purchase the property.  If the buyer was qualified for a higher amount why wouldn't they qualify at the lower amount?

Nov 01, 2011 02:29 AM
Coni Otto
Long & Foster Real Estate, Inc. - Burtonsville, MD
CRS Selling in DC/MD

Hello Candy,

They may not qualify for the loan because the bank won't lend the buyer the money for the house if it doesn't appraise for the contracted price.  examples are, FHA and VA.  In this case, the seller would have to reduce the price of the house to qualify for the loan.  

Only in conventional loans or cash sales allow a buyer bring money to the table if the house doesn't appraise for the contracted price to my knowledge.

Hope this helps... Coni

Nov 01, 2011 02:53 AM

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