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appraisal came in low (this gets long- sorry)
Hi all- I read back about four pages and didn't see this question come up.
The appraisal on the property we're buying came in about $5k less than the contracted sales price. Because of FHA guidleines, this releases us from the contract (if we chose).
Our seller has two appraisals that value the house at about $3k over the sales price and they are disputing the appraisal with our lender.
Our situation is a little different- we ended up in a trade situation with the seller and his contracting company purchased our house to be used as a rental. We don't have any problem with him disputing the appraisal considering the price he paid for our property.
Does anyone have any ideas what could have dropped the value so much in less than a year? The report showed no foreclosures or short sales in the neighborhood and the entire interior was gutted and renovated including all new appliances. Would you request a second appraisal (our seller has agreed to split the cost with us)?
Re: appraisal came in low (this gets long- sorry)
Its a numbers game. They will only look at comps (comparable properties) going back 3 to 6 months. If there weren't as many sales or properties sold at a lower price, it will bring down the appraisal value on this property.
How old are the seller's appraisals? If they are more than 6 months, they don't apply.
The appraisal can be appealed and you can request additional appraisals - at additional cost. It will take more time so you will need to negotiate for time to allow for that.
Other options: A) renogotiate with the seller for a new price that is reflective of the appraised value.
put additional money down so you can still go forward with the purchase. C) cancel the contract.
Talk with your Realtor and/or attorney for specific information regarding your options and your particular contract.
Hope this helps!
Lighthouse State Beach, Santa Cruz.
Conversely, if they are less than 6 months they do apply. If this is the case I would appeal and submit these appraisal results along with.
Thanks for this tip- his appraisals are 8 and 11 months old.
Our lender did accept them and is willing to present them to her underwriters. They have also told our agent that they will be willing to order another appraisal and waive the fee. Apparently even our lender was shocked considering the comps. The seller suggested that because he purchased it as a foreclosure and flipped it, that perhaps the appraiser undervalued the property.