Appraisal 70% Of Contract

[Tom D]

why would the buyer disagree with the appraisal, looking for you to come down. if you dislike the deal put it back on the market. it sold fast the 1st time. nothing you can really do if the bank don't. my advice, go on to the next buyer & look at buyers like floating clouds. i would tell you that from my broker days.

 

[Gobears81]

why would the buyer disagree with the appraisal, looking for you to come down. if you dislike the deal put it back on the market. it sold fast the 1st time. nothing you can really do if the bank don't. my advice, go on to the next buyer & look at buyers like floating clouds. i would tell you that from my broker days.

On the times that I have appraised a property for less than the contract price, more often than not, it is the buyers who are the most vocal with complaints about the appraisal "coming in low". Not sure if there is something under the table going on or if their pride is hurt, but it is strange because the sellers aren't usually the ones calling me with complaints.

 

[KYLECODY]

Surprised by some of the replies on here that are made without seeing the report or knowing the area.

The only argument from the seller is "more recent, similar and proximate sales". If your realtor, who has access to the entire market, has some that were not used that CLEARLY support the contract price then it is just a poor appraisal. Any other argument is just noise. If the buyers are asking you to lower the price to meet the appraisal then you certainly have the right to see the whole appraisal, its standard practice.

The original appraiser didn't appraise it how/where he did just to be cute. No appraiser wants to "kill a deal" because we know it generally will lead to more follow up, time, questions and complaints. If its a complex area there will be much leeway for differences in opinion of value. Sweeping, panoramic mountain views versus overlooking commercial will be a big deal in that price range.

If the seller is certain its worth more than just cancel the deal and move on. The next buyer will have a different lender and get a new appraisal. If additional appraisals come in "low" than maybe the realtor led you wrong in the list price. Again, the only argument with the original appraisal will be closed sales. Nitpicking adjustments or asking the appraiser to explain his adjustments or having an email "debate" is just a time killer and won't do anything but annoy everyone involved.

Good luck.

 

[InANightmare]

Thanks for the replies.

The buyer is vocal to us that we need to give them more comps to take to their bank so they can borrow more as they need an 100% loan since their current home hasn't sold yet. They aren't saying much else. There have been no attempts to re-negotiate price other than a one-off comment of "I know asking you to lower the price by $200k+ isn't going to happen so why bother."

One last question--if there are sufficient recent(less than 12 mos) basement comps in the area then all 3 should be basement comps, correct?

After giving them comps to support our price, if their banker doesn't bite, then we move on.

I like the sentiment that buyers are like clouds.

In the meantime, I have engaged an appraiser of my own to verify that my realtor is not giving me bad info.

 

[JTip]

as they need an 100% loan

The bigger the LTV, the bigger the bark.

 

[Terrel L. Shields]

is the buyers who are the most vocal with complaints about the appraisal "coming in low".

I have engaged an appraiser of my own to verify that my realtor is not giving me bad info.

Good choice. If they have an acceptable report, then don't be bashful about giving a copy to the appraiser from the bank. I know appraisers are not supposed to be pressured and "influenced" but the average appraiser when presented with a report will succumb to the "anchor bias" and that is not your fault. They don't have to value it the same way if they don't want.

 

[chad hampton]

Sounds like you have a unique property, which makes an appraisal more challenging. The fact he came in at 70% of LP tells me something is going on though.

The appraisal is only for the banks. It's a tool they use to determine how much they should loan on a property. It doesn't mean that's the maximum amount you can sell you your house for. And it's just 1 opinion. Call up 3 different appraisers, you will get 3 different opinions. I'd like to think all 3 should be withing 5-10% of each other, but on unique/challenging mountain properties, it could be a wider range.

I struggle every time I bring a purchase in lower than contract. Doesn't happen often, but when I do, I spend a lot of time asking myself - "did I miss something?", etc. I'm sure most of us do the same.

If a buyer needs a 100% loan, they may not be the right buyer for this property. Unique properties often require a good bit of cash to be brought to the table.

 

[InANightmare]

Update: so we now have one bank ordered appraisal and 2 independent appraisals, one ordered by the buyer and one ordered by me, the seller. There is $270,000 between the high and the low. The bank is at $600,000, the buyer's appraisal at $770,000 and mine at $870,000. They use some of the same comps and discount/add value for location/surroundings and value of finished below grade space.

The buyer has walked away without a counter offer because of the wide value with the appraisals and lack of confidence in the value of the home.

Moving forward with putting the house back on the market, how the heck do I know that I won't go through this all over with it not appraising? How do I set a good price for this house to try and avoid that?

 

[Michigan CG]

There is something seriously wrong with three appraisals that far apart. At least one of the appraisers is incompetent.

 

[KYLECODY]

Update: so we now have one bank ordered appraisal and 2 independent appraisals, one ordered by the buyer and one ordered by me, the seller. There is $270,000 between the high and the low. The bank is at $600,000, the buyer's appraisal at $770,000 and mine at $870,000. They use some of the same comps and discount/add value for location/surroundings and value of finished below grade space.

The buyer has walked away without a counter offer because of the wide value with the appraisals and lack of confidence in the value of the home.

Moving forward with putting the house back on the market, how the heck do I know that I won't go through this all over with it not appraising? How do I set a good price for this house to try and avoid that?

Take into account "your" appraiser most likely had in his head that you were paying him and wanted to try and make you happy somewhat. Although it is supposed to be an unbiased opinion of value many will try and "play along to get along". Bottom line: That is probably a very aggressive/high number.

Take into account "their"(independent buyers appraisal) go at $770k may have had in his mind that he was working for "the buyer" and didn't want them to overpay for the home and was not comfortable "stretching it" to the upper higher end.

The 600k appraisal sounds off as the bank may have just hired some random guy with not much experience in your area. As someone stated it is a given if you have a mountain type, higher end property in areas where views, locations are huge there is going to be some room for discrepancies.

With that much money at stake I would list it at a number where you are happy with and that it least has a chance to appraise for if people are financing. Maybe you relist and get a cash buyer or someone putting 50% down, then the appraised value becomes less of an issue.

Without knowing the area or your property I would most likely list it in the low 800s and hope for the best. That is solely based on the $870k probably being the "wish list" number that is a big, aggressive stretch and the extremely lower original 600k one just being a throw away I wouldn't consider. Low 800s seems realistic and if they are financing it gives you a realistic chance to have the buyers close the deal. Just my opinion.