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renegotiated sale price based on appraisal

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farmguy

Thread Starter
Member
Joined
Jun 27, 2007
Professional Status
Banking/Mortgage Industry
State
Texas
Just curious.
How common is it that a contract price is lowered based on an appraised value coming in below contract price?
 

lizhorvath

Member
Joined
Dec 11, 2003
Professional Status
Licensed Appraiser
State
Michigan
You'd think it would happen every time.
Then the appraiser would be yelled at and never receive business from that LO again.
Honesty and Integrity often are what starve appraisers.

But seriously, hopefully the list price and the appraised price would be similar. Then the purchase agreement price would be in there somewhere also.
It's happened to me, where my appraisal lowered the sales price, or killed the deal.

I've always thought that realtors and LO's should be paid a flat rate, and not a percentage of the deal...
 
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hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Just curious.
How common is it that a contract price is lowered based on an appraised value coming in below contract price?

Depending on the market environment (rising, stable or declining), it can be very common.

In a rising market, a buyer may be willing to pay a premium to "secure" the house.
In a stable market, maybe, maybe not.
In a declining market, a well-informed buyer should think twice.

The appraisal provides an opinion of market value for the "typical buyer" in the marketplace. Therefore (assuming the appraised value is reflective of the market), if the appraisal is lower than the contract price, it stands to reason that the buyer (if "typical") would want to negotiate the price downward.
 

Kevin A. Spellman

Senior Member
Joined
Aug 30, 2003
Professional Status
Certified Residential Appraiser
State
Massachusetts
A harbor front property on Nantucket listed for $8,900,000
Under contract back in 20006 for $10,000,000
Appraised closer to the list price
Lender asked for the new contract price of $8,916,000 to be placed on the appraisal within 30 days.

Not a thank you from the applicant. It would take me over 20 years to generate the price difference of $1,084,000 from my appraising income and not paying any bills.
 

farmguy

Thread Starter
Member
Joined
Jun 27, 2007
Professional Status
Banking/Mortgage Industry
State
Texas
Just trying to keep my eyes open. The weekend ranch market around Houston is still pretty much blowing and going, but I have been short on a few deals lately that were renegotiated down. In past few years typically when I was short our deal just fell apart and the place sold at the higher price with some body else financing. Maybe we are finally starting to cool a little in my area.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
As long as USPAP Contract Review and AO-19 live on permitting Users to deliver the $$$Bullseye - this will continue to happen all too INfrequently.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
As long as USPAP Contract Review and AO-19 live on permitting Users to deliver the $$$Bullseye - this will continue to happen all too INfrequently.

Mike-

It could also be that most buyers and sellers are typical and tend to act in their own best interest.
Consequently, the appraiser's opinion of value (based on a typical buyer/seller) is very similar if not the same as the contract price. :new_smile-l:
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Especially when they are "independent and objective". :new_smile-l: :icon_mrgreen:
 

Hamlet

Elite Member
Joined
Aug 14, 2006
Professional Status
Certified Residential Appraiser
State
Ohio
It would be very curious indeed to see how many appraisals would actually come in at contract price without a contract for the appraiser to review.
:new_llying:
 

Kevin Mc

Elite Member
Joined
Jun 7, 2004
Professional Status
Certified Residential Appraiser
State
New York
Thank you.

As long as USPAP Contract Review and AO-19 live on permitting Users to deliver the $$$Bullseye - this will continue to happen all too INfrequently.

we should never see contracts.
 
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