The adventures in Real Estate continue….
Recently, I was in contract on a home that I could not find an apples to apples comparison to really get a feel on the home’s value. It always concerns me when there isn’t a real good way to figure out a home’s value. There is always room for interpretation; however, when you have to “stretch” to make things fit it is never a good thing. Then having the added pressure of a multiple offer situation it is a recipe for disaster. In this case, the appraisal came back significantly lower than the agreed upon purchase price which is one of the points that Forbe’s article makes in Top 8 House-Hunting Mistakes.
Appraisals the Make or Break
The buyer did not want to pay more for the property then the independent appraiser was going to evaluate it for and the bank was not about to entertain a second appraisal. Also, getting an appraiser to update their appraisal is well, pretty difficult. Why didn’t the buyer go for another lender? Well, the buyer was comfortable with the lender. Everything looked like it was on the up and up and I really could not dispute this appraiser’s work.
Disputing Appraiser’s Work
Is disputing an appraiser’s work worth it? It depends. Can you refute it with your own comparable properties? If you can provide better comparable that have recently sold than the appraiser found, you can try. However, talking with the lender on this specific case; disputing an appraisal is rather cumbersome and really not worthwhile. The proverbial chasing the dog’s tale is the best description of disputing an appraiser’s work.
Do the Sellers Have to Sell?
Sellers do not have to sell even if the appraisal comes back lower than the agreed upon price. They can put it back on the market and hope for a better appraisal or for a buyer to come with cash (appraisal is not needed but I sure as heck recommend them).
What is Going to Happen Next?
The adventures in Real Estate continues with this client… We continue to house hunt:
- Knowing now NOT to get caught up in the hype of multiple offers and a hot market.
- Doing our homework early on comparable properties.
- Always writing in a contingency clause to walk away from the property if the appraisal does not come back.
It is not worth it to me to have a client stuck buying an over priced home.