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RE Agent didn't look at comps.

I am a first time home buyer and have tried to educate myself on the finer points of buying a house, but I'm certainly not a professional. I am pre-qualified & FHA approved. I found a house, one I'd been keeping an eye on for many months. I didn't realize my RE Agent failed to look at "comps" before submitting my offer, which was accepted by the seller. My agent said my offer was good. I paid for the home inspection and appraisal. The appraisal came back $7,000 UNDER my offer. FHA will only loan for the appraisal price. I'm not willing to pay the difference. Seller isn't budging even though seller's agent agreed with the appraisal price and encouraged the buyer to accept the appraisal price/offer. Needless to say I'm house hunting again. 

What frustrates me is my agent didn't really look at the "comps." Otherwise, don't you think she would've advised me to offer a lower price? I've since looked at the comps and the comps all indicate my initial offer was far too high. Now I'm out almost a grand, and I just started.  Do I need a new Agent? 
  • May 17 2011 - Jupiter
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Answers (11)

I know there is always confusion about items such as this, but there is no one definitive answer as to the true value or price of a property.  If there is a condo complex or a large subdivision with lots of comps and very, very similar homes you can get closest, but that is rare.

You cannot get 2 people to agree on the price of a property, whether that be seller and agent, 2 agents, 2 appraisers ( or often a buyer and a seller ! ).

If you hired another appraiser it is likely that the other appraisal would come in differently.  If another value came in 15K higher, would you now be thrilled that you  are getting  a good deal?

So I'm not worried about the value coming in slightly lower ( although the seller is probably crazy to not drop to the appraised value to proceed ).
But the fact that your agent did not discuss your offer or review comps is a problem.  In fact you should have both reviewed them together, tried to figure out as closely as you can the fair market value of the property to you and tried to get it at or below that number.  So yes, you should ask why that was not done.

Incidentally, the fact that it does not appear the  seller counteroffered your price, just accepted means that you probably did offer too high.
  • May 18 2011
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Sean-  There are many things that an Agent should do before helping a Client write an offer and pulling comps is one of them.  You are out the money for the Appraisal and Inspection and that can leave a sour taste.  Don't give up! Use this as a learning experience and honing your skills on selecting the right Agent that will work with you.  Appraisal is an art, it's simply an opinion of value.  The Seller might be crazy to not settle for what the appraisal came in at?  The next Buyer's Appraiser may make the value less or make it more?  We may never know.  Good luck on your home search and on Agent awareness.
  • May 17 2011
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Ron - thorough response, but you might want to read  Zillow's Good neighbor Policy, posted below, as contact information isn't allowed in the body of  your answer.......
  • May 17 2011
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Sean,

The question is, was your agent really your agent?  If you signed a buyer agency agreement with that agent and he or she agreed to represent you, then you are absolutely right in thinking "your" agent should have looked at the comps before writing up an offer with you.

I assume the $1,000 you are out is the cost of the appraisal and the home inspection?  In which case you are out that amount.  Your deposit money, however, should have been refunded when it was evidenced that the FHA approval was not being given you.

A true buyer's agent would be working for you in a consulting role and advocating for you in the purchase.  That's why comps should have been done for you.  If you can't expect a buyer's agent to help you determine value for you, why would you hire one?  

I'm on your side, your agent dropped the ball.  I teach the ABR (Accredited Buyer Agent) course and one of the primary things the course teaches is that before writing up an offer the buyer's agent has a responsibility to run the comps and go over them with the buyer.

You probably do need to look for a buyer's agent who understands the meaning of fiduciary level service to a client.

Ronn Huth, Buyer's Choice Realty
[phone removed by Zillow moderator]








  • May 17 2011
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As all the agents here have pointed out appraisal is not a exact it is a value of opinion. In this market appraisers are being very conservative. Your agent is not an appraiser so there could have been something the appraiser found that affected the value in this way. This is happening more and more frequently due to foreclosures affecting value and these can occur after the offer was made and a sale posted that affected the value.
  • May 17 2011
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 The biggest problem in real estate is that the properties are not appraising. WE have an idea of value in the property by knowing our market area, however the appraisers have very strict guidelines that they have to follow. I have had this happen to me on one of my deals where the appraiser couldn't look past 2 miles of the property. This really hurt my value, but in the end the seller ended up splitting the loss with the buyer. It worked out for everyone! Good luck and I hope that you can find a way to still purchase this house.
  • May 17 2011
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Who said you are out your $1000 deposit? If you have an FHA Addendum it would state the home needs to appraise for an amount that would be filled in the document. Talk to your agent, give him or her the chance to assist you or show you what they did to protect you and your interest. Don't be afraid to confront them in a non aggressive way. This is when communication is so important. I hope all works out well for you.
  • May 17 2011
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Appraising is an ART not a Science. If you send 3 appraisers you will get three different values and I assure you that one will be off either way by $7000.00 dollars. Generally your lender if you raise your rate can offer you Lender credit to help absorb some costs so that your money goes to the down payment and not closing costs. Maybe you can salvage if that is done
  • May 17 2011
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Sean,

I think you are doing a lot of assuming. You don't need a new agent, you need to be reasonable. Comps may change rapidly. One new REO or short sale on the MLS in the subject property's area, or just sold, can alter the numbers. Appraisals are not guaranteed to come in at the value that you want. 

Happy funding, Rudi
  • May 17 2011
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Pricing a home is not an exact science....especially these days, and with this turbulent market.

 "Comps"  are often open for interpretation - ie: one new kitchen might have more value than another new kitchen, depending on what materials were selected.
If you asked 3 agents (or appraisers) for  price quotes, there might very well be a difference  of 5% or more among the quotes

I once sat on a jury for a trial involving the value of a commercial building.....the only witnesses being called were appraisers (the supposed experts on assessing value).............well - each had their own opinion of what the "value" was...........to say there were differences of opinions would be putting it mildly.

That being said - regardless of which agent you are working with - this should be a team effort. Make sure you look over and discuss the comps for any future purchase. Become knowledgeable!

I don't know what the price of the home is, but a $7000 difference might only be a few percentage points off........it can happen, especially in this uncertain market.

Whether you should use a new agent or not  is up to you.
  • May 17 2011
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They should have showed you the comps, or at least discussed with you what the comps were. However, since a real estate agent is not an appraiser, and comps can be hard to find in some neighborhoods, that may be a bit of a moot point. You are somewhat "protected" by your appraisal from paying too much. Where did you find the comps afterwards? Hopefully not Zillow or another similar online site, as their "zestimates" are not necessarily within reason at all. There is always a possibility the appraisal was bad or overly stringent, which also happens sometimes.

You should discuss this with your agent to find out if they really did look at comps or not, and if not, why not. If they did, ask them to show them to you.  If they sound clueless, then yes, perhaps you should ask your agent to part ways.

Good luck with your home hunt!
  • May 17 2011
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