Will our deal get crushed if the home appraises low?

user005699
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We are currently under contract on a house. I am concerned about the appraisal coming in low with our bank, Chase, because they are such a large bank. Our agent told us big banks tend to be more cautious with appraised values than local banks.

FYI, The address is technically in a town that is less desirable than the neighboring city, but we are literally talking about the neighbors across the street being in the more desirable city. That is one of the things that drew us to the house was the great location but low taxes due to the city name on the address. Should the appraiser take the location in to consideration regardless of city name for the address? If they compare it strictly with homes in our potential new city, the home will appraise low, but compared to surrounding area, the price seems in line.

What happens with a bank like Chase if the appraisal come in low? Can we ask for another appraisal or should we try another lender? We can't afford to bring the extra $5-10k to the table to close and, from our experience, the seller will probably not come down to the appraised value to get the deal done.

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February 03 - Countryside

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Answers (7)

Sherri Bloom, "Sherri Bloom"
- 4.8/5.0
- (1 review)
Contributions:60

Hi. If the appraisal comes in low, you can use that to your advantage to re-negotiate your purchase price. The seller will have to come to grips that their house is not worth as much as they had hoped and if they want to sell, they will have to strongly consider lowering it if they want the deal to go through. In reality, you don't want to pay more for your house than what the market suggests it's worth. I know you must love the house, but in the long run, this may not be a good financial decision for you. Good luck!

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February 03

Appraisal guy
Contributions:120

All banks are not the same. Each bank will require a set of data to analyze. Some larger banks will have five pages of small type of "if than" statements of exactly how they want their appraisal completed. Now, if the appraisal comes in low, you'll have to bring cash to the bank or you may have to negotiate the price of the home with the seller. Look, it is in your best interest to have the appraiser find the real value of your home in today's market. Why do you want to buy a house for too much money? I find that many home owners that do this try to refinance two years later and can't. Maybe the value went down, maybe not. Don't push the issue. If the value is too high, it is too high. If one appraisal value does not come in and you are able to get a loan at a different bank, be ready to pay the piper if you decide to refinance. This is your one opportunity to pay down your loan.

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February 03

Elena Petrov, "kapyarets"
- 4.3/5.0
- (3 reviews)
Contributions:174

I the current market situation it's pretty often when property appraisal comes lower than selling price. There is always a possibility to renegotiate the selling price. That is the best way to deal with the problem and save the deal. There are different ways to split the difference. To protect buyer's position in the negotiation the buyer needs to include a special contingency in the offer and P&S regarding appraised value of the property.

The buyer has no influences on the bank appraisal. It makes no sense to order the second appraisal. It will take time. The second appraisal usually can not be done sooner than 3 weeks from the first one. The buyer will have to pay for that appraisal. There is no guarantee that the second appraisal will be higher.

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February 03

Philip Sencer, "Philip_Chicago"
- 5.0/5.0
- (1 review)
Contributions:551

All banks are the same. By law they need to hire an independant appraiser who appraises by using standard protocal. They all do it the same way. If the appraisal comes in low you can walk away fromt he deal and get your Em back. In this market the sellers tend to be more motivated to sell so it is their option to come up with the difference or lower the price. Why would you want to over pay?

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February 03

Diana Rogers, "diana.rogers"
- 0.0/5.0
- (no reviews)
Contributions:6

Good morning.

The appraiser should pull comparables the for town in which you are purchasing your home. Not for surrounding towns.
Typically, if a home appraises lower than what you have offered to pay for it, the seller will will come down to the appraised value. If that is not the case in your situation then you will need to make the decision to either move forward or walk away. And if thehouse appraises for higher than what the accepted offer is, then consider that you have made a good investment! Best of luck with your new home purchase.

Diana

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February 03

Margie Casey, "Margie.Casey"
- 0.0/5.0
- (no reviews)
Contributions:4

Dear Buyer,

This story I wrote will help you:

[website removed by Zillow moderator]

Warmly,
Margie Casey
Founder

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February 03

JohnWilt
- 0.0/5.0
- (no reviews)
Contributions:44

You may want to consider a 2nd appraisal. Also, consider having your attorney respond to the sellers attorney and let them know the appraisal came in $X low. Request that the seller lower the price to match the appraisal or, that 'the buyer reserves the right to cancel the contract'. Sounds like you love the home but you would not pay over value for a new car would you? You can certainly request and pay for a second appraisal. If it comes in higher will your lender take it? If it comes in lower will your lender use this one? Certainly if it comes in at or near the original you should approach the seller and request them to lower their price 'now that we have a clearer indication of market value'. Not saying appraisers are right all the time. Many are unfamiliar with the neighborhoods and properties they get assigned to. A second appraisal would indicate which way to go. Good luck.