Buyer appraisal $30k under offer - what are our options?
Need some advice / suggestions - once again! We are the buyer on a SS - 180 days in as of today and still waiting for approval. We went ahead with our lender appraisal in an effort to save time and it came back at $30k under our offer price which would require us to bring $27k more than we anticipated to the table. The 2nd bank involved is currently doing their own appraisal and we asked our Realtor to confirm if that is completed and if they can find out if that # came in lower as well.
I would've never guessed that this home would've appraised that much lower than our offer which was $29k less than the "list price" which I know is basically irrelevant. Given that we don't have an extra $27k laying around we are trying to determine our options. I will preface this by saying I don't get a warm fuzzy from our agent that they will suggest amending the purchase price.....when we asked about confirming the other appraisal and that we needed to discuss options, he mentioned that the listing agent has received a back-up offer - almost in the context of "well if you want to walk, no big deal as there is another offer". I guess we don't feel entirely comfortable that they can convince the bank that the price is too high.....any other buyers are going to face this same issue.
So, do we have a chance at arguing the price back to the seller's bank (and attaching our appraisal) - even though we are still waiting for the intial approval? How common is this on a short sale, and do the banks ever agree to take a lower amount? I know it would take even more time, but it's a big margin to try and make up. If it were only $5k we would probably just do it but we're talking some bigger dollars here. I can't imagine the seller's would be willing / able to make up some of the difference either (short sale reason was due to divorce and we know the owner has moved out). Any other creative options?
Our appraisal was the last thing that I thought would give us a hiccup on this deal. Appreciate your feedback.
Replies to This Discussion
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Permalink Reply by Ann Howard on
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Here is one option: Do the comps support the list price?.If they do ,you can submit your comps to the appraiser to justify the listing price. We had a listing that came in low and had to justify the price and did. The appraiser ammended the report. Was the listing agent present during the inspection? Usually they are and have comps handy for the appraisor should they need them.
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Permalink Reply by Tamara Vannest on
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Unfortunately (or not) there is really only 1 true comp. This is a lakefront home in a small subdivision with many unsold lots still. The 'true comp' on same lake sold for $365k a few months ago. Our offer is $400k and appraisal is $370k (our initial offer was $375 but were told bank would reject anything less than $400). We viewed the other home prior and 'ours' has higher end finishes and more features inside/out including the kitchen/bath. However that one came with dock and boat lift, and our seller just recently sold her dock! The other nearest sold comp was a foreclosure (not lakefront) and sold for $225k. Both of these sold after our initial offering. I don't know if listing agent was present for the appraiser (I will find out) but if I had to guess I would say no - she seems to be pretty hands off - letting 3rd party negotiator do the leg work.
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If you are in contact with the Listing Agent's negotiator, you should submit your appaisal to them, and cc the Listing Agent, since the 3rd party negotiator is in contact with the lender's negotiator they can submit the appraisal for you. Banks want to sell and it will cost them more money if it should fall to foreclosure. If those are the only comps then it will not appraise for the $400,000 no matter who does it. We had a situation where the bank ordered a BPO on one of our listings and it came in way higher than the lisitng price. We fought the appraised price with supporting comps. I know it is harder if you are on the Buyers end, sometimes the Listing agent does not communicate well. Hope this works out for your Buyer.
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Thanks for your comments Ann. After reviewing the hard copy of the appraisal I think we have a better case for arguing a lower price with lender vs. getting a higher revised appraisal from our buyer lender. My only concern is that IF we counter, could they just reject it (vs. countering back)? Having been told that there is now a back up offer I'd hate to be kicked out of the game for trying to renegotiate the price at this point. Also, IF we decide to counter, should we wait for the bank approval to come back or just submit the counter now?
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The agent may not have another offer, maybe just trying to bluff, but you gotta go with it.They could reject it but as it stands your Buyers cannot come up with the difference, so what do you have to loose. You need to submit any counters prior to approval. Once you have approval it has to close under the terms submitted. One thing to remember is that the listing agent really does not want to start the process over, the lender wants to sell this, it is too costly for them to take it back, and if there are other Buyers out there, they will most likely have the same appraisal issue unless they are paying cash. Hope it works out for you and your Buyer.
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Appreciate your feedback Ann! We have some decisions to make - we are the buyers (sorry if my earlier response led you to believe I was an agent) :)
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Yes, my mistake, there are lots of agents who post on the site that are looking for answers and thought you were one of them. If you are represented by an agent, they should be working with the negotiator to complete the sale. Appraisals can be challenged, you have nothing to loose and everything to win. Best of luck to you.
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Permalink Reply by Bryant Tutas on
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xx
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Permalink Reply by SE Davis on
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The buyers lender ordered appraisal is the PREVAILING DOMINANT DOCUMENT.
Get a full copy sent to the negotiator have your buyers agent write an addendum supporting a new purchase price matching your appraisal value and submit it to the other side.
Thats your only choice as far as I interpret this.
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Thank you for all the replies. I'm hoping to meet with agent this week to review and see about the addendum. My only concern is that the banks will reject (vs. counter). After having committed to this wait I don't want to lose out now over this appraisal, but I feel like the addendum would be a better / easier choice than arguing the appraisal due to our market, and we are not in a position to make up the $30k gap. The appraiser had to go 9 miles out to get "sold" comparables. The only one within a mile of 'our' house sold for $365k so that doesn't help as far as arguing the appraisal would go. The 4 sold comparables used ranged from $352,500 to $370,000. I will let you know what happens!
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Permalink Reply by Donna McClelland on
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I've had numerous appraisals come in low so far this year and every time, I've sent a copy of the appraisal to the short lender (along with an inspection report if there are property issues) and every time within a few days, I've had that new lower purchase price approved. That's what the person negotiating this short sale needs to do. The backup offer won't do them any good because, as you said, they will have the same problem with that offer.
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Thanks Donna - this gives me some hope that a price addendum will go through - if the agents/3rd party negotiatior present it properly. We are meeting tomorrow with our agent to discuss the options. We are unable to bring any extra $$ to the table. We are already putting out $45,000 and we will have to buy all new appliances as seller is taking those, and they just recently sold the boat dock so that is another expense (granted not an immediate one). I doubt the sellers can or would want to bring more $$ either so I think our only choices are a price modification, fight the appraisal from our own bank (local credit union), or try financing with another instituion but that isn't really an option we want to pursue. The 2nd bank (PNC) completed their appraisal last week as well so I would be curious to know if it also came in low. The first (Quicken) only did a BPO.
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