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Appraisers Being Used As Leverage In Negotiations After Contract?

  • Thread starter Deleted member 128537
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Deleted member 128537

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In Wisconsin the offer to purchase has an "appraisal contingency" in the contract which says that if the value doesn't come in at the purchase price the buyer can rescind the contract. In the last few months I and other appraisers in my county have seen a number of grotesquely over priced properties get contracts on them at grotesquely high prices. I have never appraised so many properties below the contract prices; and by not just small amounts either! Recently I talked to a real estate agent and he informed me that buyers are using appraisers to their advantage. They are writing contracts that are over priced to get the deal signed, but then trying to renegotiate if the appraisal comes in low. Recently I just turned one down that had a purchase price on it of 308,000. When I looked at the property I just walked away and said I'm not even going here. It was at least 100,000 over market value. Today I had another appraiser call me about this property and he said the same thing. He told the lender to get someone else. He also said he turned down a similar situation on another property. It was just ridiculously too high of a purchase price. It made no sense. Part of my hesitancy is that I had a complaint filed on me at the state by the seller when I appraised a property 100,000 less than purchase price on a 399,000 offer. They had to renegotiate. I am not going to be the sucker twice. And it's easy for anyone to file a complaint; especially a ticked off seller.

I'm just wondering if anyone else is seeing this happen. It's hard to know what to do about it. In some respect I believe we owe it to someone to bring things into reason. On the otherhand we open ourselves up to all kinds of abuse when we take on these assignments. What do the rest of you think?
 

J Grant

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Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Who cares? Why would you care if the price is so much higher than your MV opinion? We are responsible for our market value opinion, not for their price. I think it's sad for appraisers to walk away from orders for reasons like this...imo
 

djd09

Elite Member
Joined
May 20, 2009
Professional Status
Licensed Appraiser
State
Ohio
Who cares? The buyer, seller, realtors, bank, AMC, and a player to be named later.

I haven't seen the 100 k difference in price since the Boom. And in the beginning.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
It's awful that you had a complaint filed by a seller, but sounds like it went nowhere since it was nonsense ...the RE agents do sound odd writing such high contracts though. Still, if it's a good client just do your job and bring in your MV opinion, if it is a trend to write very high price contracts with these contingencies you can comment on it.
 
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Deleted member 128537

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It's awful that you had a complaint filed by a seller, but sounds like it went nowhere since it was nonsense ...the RE agents do sound odd writing such high contracts though. Still, if it's a good client just do your job and bring in your MV opinion, if it is a trend to write very high price contracts with these contingencies you can comment on it.

Yes, the complaint went nowhere. But getting a letter from the state in the mail makes for a bad day and puts one on edge. And it's very time consuming writing the rebuttals. A month ago I did an appraisal on a 2.75 million contract price. I appraised it for 2.2 million. Suddenly the seller is calling me wanting to discuss the appraisal. I told him I couldn't, he should call the bank and talk to them. He wasn't very happy about it. Thought I was playing some game. I was paranoid for the next month wondering "here we go again." Thankfully that one closed. Apparently the buyer really wanted it.

Until the law changes where where the only one that can file a complaint against an appraiser is the client you are working for, I know in my area appraisers are going to walk from deals they see are so obviously out of wack. I simply do not like living with a cloud hanging over my head. A friend of mine who is an appraiser had something similar happen to him and it ended up costing him a lot of grief, because someone on the board had a burr up their butt and wanted to hang someone. It was a frivolous complaint and he was made into a scapegoat. And this isn't the only time this has happened. Once the state board gets your report they can look for anything.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Who cares? Why would you care if the price is so much higher than your MV opinion?
Obviously never been sued or you would be more discriminating.
Until the law changes where where the only one that can file a complaint against an appraiser is the client you are working for, I know in my area appraisers are going to walk from deals
Exactly...I don't care if I have it 90% done, I'll eat that work. Recall a borrower sending me more "information" not just once, but again and again, each a more expensive sale in the area. I sent it back to the client and said I lacked the competency to do it. The client didn't like it, but i didn't care. It's my license and a trip before the board can run into the thousands in expense. I will let someone else fall on their own sword
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I can totally understand and empathize, though I feel that appraisers need to stand up for what we do ...that said, the reconsideration of value allowed by regulation is a disgusting development, as is the fact that anyone can file a frivolous or spite complaint with no recourse and free of charge ( to them)
 
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