What To Do When Your Appraisal Comes In Short
Jamie was referred to me a handful of months ago. She was afraid that she wouldn't qualify due to her rocky credit history. She had was in the middle of "Credit Consumer Counseling" that was helping her get back on the right track financially. She had some late mortgage payments in the past and other factors that made her skeptical of being able to obtain financing to purchase a home.
After pre-approving her, she found a home and applied for an FHA mortgage. Only a few banks will accept a borrower that is in the midst of consumer credit counseling. Most require 12 months to elapse after the counseling was completed. WE chose the lender that best fit her specific scenario. To her surprise, we received her approval shortly after applying and we were off to the races with getting her loan closer to closing.
Everything was going very smooth until we hit a brick wall. The home she was purchasing was priced at $230,000 and the home appraised at $186,000. Now this was the first time I had ever seen this happen before (not a home not appraising, but a difference of $44,000 was not the norm). I presented the solutions to the client. They were as follows:
1. Walk away from the home
2. See if the seller would negotiate with us
3. Complete a rebuttal on the appraisal
4. Make up the different in the price
5. Try and obtain conventional financing and order a new appraisal
We began with the rebuttal. It took about a week and we provided unused evidence to the appraiser such as new comparable homes that were not used in determining the value. We were able to get the value changed to $195,000. Still $35,000 short though. Then, we began negotiating with the seller and at the same time beginning the process of looking for a lender that would approve conventional financing for a borrower in the middle of credit consumer financing. We did not inform the seller of our plan B, as we wanted to see if we could negotiate down on the price due to the fact that we weren't in complete disagreement with the appraiser.
Last night I received the call from the seller (a relocation company) that they would drop their price to meet the appraised value of $195,000. A victory if I don't say so for Jamie. We are aiming to have this loan closed in the next week and a half.
Get creative. Offer solutions. Stay positive and give hope.
"Hope Deferred Makes the Heart Sick" - Proverbs
If you have any appraisal rebuttal questions or want to discuss solving a problem together, feel free to reach out to me.
(Image from blog.thinkbuzan.com)
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