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Answers (5)
- Song San, "song san"
- Contributions:85
I got in a similar appraisal situation. My offer of $540,000 $100,000 more than the appraised price of $445,000.
Luckily I had a few contingencies for the purchase, inspection (which they failed because of the repairs), termites (which they failed), and appraisal. If it was like $30,000 difference I would have taken it, but I had to cancel escrow because it is hard to swallow $100,000 in difference. My agent was trying to push me to pay the full price and my older brother scolded me for backing out. Did I do the right thing to back out because of the $100,000 difference?
- boxberger_appraisals
- Contributions:1
As an appraiser, I can tell you the variance should be closer to +/- 1-4% in most markets that are reasonably active and homogenous. As I've noted elsewhere, our job as appraisers is to tell the lender what they could likely sell it for 'tomorrow' if they have to take it back, and not what the current buyer is willing to pay for the home 'today. There can be plenty of valid reasons that a given buyer or seller may be 'atypically' motivated in a transaction. As Ofe noted earlier, these situations are negotiable, and you need an experienced player on your side, whichever side of the transaction you are on.
- Ofe Polack, "Ofe Polack"
- Contributions:1412
This is an issue that is happening quite frequently lately. There are a few options, and seasoned Realtors can be most helpful in situations like this one..
The buyer can back out, the buyer can pay the difference or the difference could be split between buyer and seller.
Be guided by an experienced Realtor.
The buyer can back out, the buyer can pay the difference or the difference could be split between buyer and seller.
Be guided by an experienced Realtor.
- agentblu15
- Contributions:353
It may also important to look at and consider the neighborhood and market condition sections of the appraisal. If it cam in only a little under the accepted offer, but the market is noted to be stable or increasing, the seller may be able to point out/negotiate based on the idea that the property value may increase, therefore giveing themselves a little more leverage (not much). On the other hand, if the market is noted to be declining, this puts the buyer at even more of an advantage, because the property would be expected to drop even further below appraised value over time.
One thing to keep in mind though - a +/-10-15% variance in appraised value is common and accepted. Which means that if the appraised value is within 10-15% of the offer, it's possible that the limitations of appraisal accuracy are to blame, and another appraisal could come in at or even slightly above the offer price.
One thing to keep in mind though - a +/-10-15% variance in appraised value is common and accepted. Which means that if the appraised value is within 10-15% of the offer, it's possible that the limitations of appraisal accuracy are to blame, and another appraisal could come in at or even slightly above the offer price.
- Terri Linnell, "DebtsNMesses"
- Contributions:6728
The seller will try to get the buyer to pay the difference in CASH. The buyer will say (or should say) NO. Price SHOULD eventually be negociated down to the appraisal price.
As long as the contract was written up with the correct loan contingency, the buyer can back out of the agreement without spending a dime, since the house didn't appraise high enough for the loan. Buyer holds the power in this position.
As long as the contract was written up with the correct loan contingency, the buyer can back out of the agreement without spending a dime, since the house didn't appraise high enough for the loan. Buyer holds the power in this position.
If an appraisal comes in lower than an accepted offer what is protocol for negotiation?
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