Why Does an Appraisal Matter When You're Buying a Home?

Real Estate Agent with Sunset Properties, Powered by Movoto DRE #01485322

You're Buying a Home with a Loan


The Bank Requires an Appraisal. 


You found the home you want to buy.  You and your Realtor review the comparables and you decide the price you'd like to offer on the property.  The offer is submitted and the seller accepts.  Fantastic!  Now what?


If you're obtaining a loan, the bank will require an appraisal.  


The goal is for the appraisal to come in at the contract price.  If it comes in higher, it's interesting but doesn't affect the transaction.  It may make you feel good to know you have some built in equity right out of the gate.


What if the appraisal comes in low?  Then what happens?


  • The seller may ask that the buyer bring cash to the transaction to make up the deficit.

Buyers don't usually love this option.


  • The buyer may ask the seller to reduce the price to the appraised value.

Sellers don't usually love this option.


  • The lender and agents will work on providing compelling information to challenge the appraisal.  

Appraisers are not often fans of this approach because their work is being questioned and no one likes that.  That's not to say it can't be successful, because it can.


What often happens is a dance of sorts between the buyer and seller and they meet in the middle.  


In one situation, I had buyers who wanted to bring in the whole difference of $10,000.  I had to convince them to allow me negotiate.  They were worried the seller would cancel. The seller cannot kick a buyer out of a transaction unless the buyer has failed to do something they've contractually promised to do.


As a matter of practice, the listing agent or the buyer's agent should be present at the appraisal.  Whichever one I am, I want to be there.  Showing up matters.


Appraisers don't really want a Realtor in their ear, but when the Realtor offers useful information that saves the appraiser time or provides additional insight, it's a good thing.


The Realtor can provide specifics about recent sales in the neighborhood as well as information about the HOA if there is one.  The appraiser may want to know if there's litigation of any kind, the percentage of owner occupancy or delinquency rate on HOA dues, if any.


The information the Realtor would provide would be something like: 

On this date and time, I called the HOA and spoke with so and so who stated the following....


Every piece of a transaction must be managed in a way that is of benefit to the client.  The details matter and it's imperative to have a Realtor who takes special care to look after these things for you.



Interested in buying or selling your Orange County, CA home?

Contact me today to get started!

JILL MURTY | 949.355.5321

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Barbara Todaro
RE/MAX Executive Realty - Retired - Franklin, MA
Previously Affiliated with The Todaro Team

Good morning, Jill Murty, Realtor - Serving Orange County, CA  nice narrative on how an appraisal can influence the smoothly flowing transcation.... buyers and sellers would be wise to contact Jill Murty for guidance when thinking of jumping into the real estate arena....she's well versed in protecting her clients....

Sep 07, 2015 11:12 PM #1
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

I recently had a situation where an appraiser came in at the original offer price. turns out the bank didn't provide him the entire contract only the original offer not the final counter offer.  Totally screwed my sellers because he won't go back and change anything at this point, but listing agents need to make sure the right contract is in appraisers hands.

Sep 08, 2015 12:05 AM #2
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hi Jill -- the appraisal process can be a dance of sorts for both buyers and sellers. Like you, I believe it's so important for one or both agents representing the sides to show up and present the information(comps, property improvements, explanations, number of offers) that can make a difference in the appraised value. 

Sep 08, 2015 12:22 AM #3
Jill Murty, Realtor - Orange County, CA
Sunset Properties, Powered by Movoto - Laguna Niguel, CA

Thanks Barbara Todaro.  I really appreciate all that you've said.  

UGH!  That's just awful.  Appraisers aren't keen on going back and updating their work.  Sounds like the listing side blew it Tammy Lankford.  

Show up - Be a facilitator - Provide useful information = Probable success Michael Jacobs.

Sep 08, 2015 01:04 AM #4
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

There was a time a few years ago when I was having to challenge almost half of appraisals because they were coming in so low. I had some pretty good success at getting them to raise the appraisal amounts. Luckily it's been quite a while since I've had to do that since it seems most appraisers have finally caught up to the market increases and are at least coming in at contract price. 

Sep 08, 2015 02:37 AM #5
Jill Murty, Realtor - Orange County, CA
Sunset Properties, Powered by Movoto - Laguna Niguel, CA

Good for you for the great success you've had getting appraisals adjusted to the appropriate amounts.  It's extra work that your clients most certainly appreciated Nicole Doty - Gilbert Real Estate Expert.

In the past, I've had issues with out of area appraisers who didn't understand or appreciate the differences in value and desirability nearby neighborhoods and that resulted in faulty appraisals.  It hasn't happened recently, but I'm still in the habit of asking if the appraiser if from the area. 

Sep 08, 2015 03:06 AM #6
Laura Allen, Lake Tahoe - Truckee Real Estate for Sale TahoeLauraRealEstate.com
Coldwell Banker, Tahoe City, CA (530) 414-1260 - Tahoe City, CA
Tahoe Real Estate Agent Helping Buyers and Sellers

Jill Murty, Realtor - Serving Orange County, CA - What a great way to explain the possible options and outcomes when it comes to the issue of appraisal these days!

Sep 08, 2015 06:46 AM #7
John Meussner
Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, - Walnut Creek, CA
#MortgageMadeEasy Walnut Creek, CA 484-680-4852

Being there is SO important.  Not all appraisers like having info handed to them, but many find it useful and keep their ears open to what a local agent has to say.  It definitely doesn't hurt, and NOT being there can nearly destry a transaction.

Sep 08, 2015 06:47 AM #8
Jill Murty, Realtor - Orange County, CA
Sunset Properties, Powered by Movoto - Laguna Niguel, CA

Thanks Laura Allen, Lake Tahoe - Truckee Real Estate for Sale www.TahoeLauraLuxuryHomes.com.  I appreciate it.  Clients often don't understand that there can be lots of twists and turns having to do with the appraisal part of the transaction.  Addressing potential hiccups before they happen and advising the clients of possible outcomes can make things go more smoothly.

Sep 08, 2015 07:01 AM #9
Jill Murty, Realtor - Orange County, CA
Sunset Properties, Powered by Movoto - Laguna Niguel, CA

Showing up counts and sometimes you have to do it even when the other agent doesn't share your point of view.  It's good to have the information available to the appraiser; the appraiser doesn't have to take it, but most do and are appreciative.  The special spelling is duly noted John Meussner.

Sep 08, 2015 07:04 AM #10
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Jill, in a strong seller's market the appraisal is a contingency that can be an issue, and we all hope it comes in at value! 

Sep 08, 2015 08:14 AM #11
Jill Murty, Realtor - Orange County, CA
Sunset Properties, Powered by Movoto - Laguna Niguel, CA

Absolutely Joan Cox.  That's when it becomes especially important that one or both agents show up and present compelling information that supports the contract price.  

The seller may ask the buyer to remove the appraisal contingency and the buyer may agree and show proof of funds to cover a deficit, if any.  

It sounds good, but buyers can get out of a transaction in a lot of different ways, so it's no guarantee of success.

Sep 08, 2015 08:24 AM #12
Nick T Pappas
Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Hun... - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

Jill, I used to be an appraiser in a past life and yes...no one likes their work questioned, but most appraisers will accept info from a Realtor especially if it will save them time. 

Sep 08, 2015 08:33 AM #13
Jill Murty, Realtor - Orange County, CA
Sunset Properties, Powered by Movoto - Laguna Niguel, CA

It's great to hear it from you since you've been an actual appraiser Nick T Pappas.  I like to offer helpful information upfront and it's usually gratefully accepted.  

If the agent ignores their responsibility to assist and then complains later, it's kind of hard to blame the appraiser for being unhappy when questioned.

Sep 08, 2015 08:52 AM #14
Mike Rock
Complete Design - Granite Bay, CA
Granite Bay Luxury New Construction...For Less

great post. i look for the day when i can make my own lil video/audio/chart file to compare area homes that are hurting mine. i think there is actually a business there... the appraiser is just looking at the mls and county records. seldom has he been in those homes. your EYES could be invaluable to him. great post as usual

Sep 08, 2015 01:26 PM #15
Jill Murty, Realtor - Orange County, CA
Sunset Properties, Powered by Movoto - Laguna Niguel, CA

One of the best reasons for one or both agents to be present is provide the information that the MLS and county records can't.  It is widely known that a gap the size of the Grand Canyon can separate a realtor's optimistic description of a property from the truth MIKE ROCK.

Sep 08, 2015 01:37 PM #16
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