We thought things were going so well...

ballysharonJuly 31, 2009

My husband and I are in our 40's and are purchasing a new home. We found the house, we got an accepted offer (after some countering, naturally) and a settlement date.

Well today we found out the condo was appraised at $10,000 below what we are going to be paying and the mortgage company won't cover the loan.

Is this something that somehow the realtor should or could have foreseen. I was less than impressed with her thus far and someone has told me that she messed up.

We're of course stressing because we gave notice on our apartment (luckily 2 months notice instead of 1 like we could have) and are worried that the sellers won't come down.

Another question....the house has been on the market for about 11 months. The sellers are an older couple. What do you think the chances are that they won't come down to the appraisal price? I would think it would be in their best interest to do this as it could come up with the next potential buyer as well.

Thanks for your input. We're learning as we go.

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Is this something that somehow the realtor should or could have foreseen.

Not necessarily in this current market. Appraisals have been a real problem.
There is no way of knowing how your sellers will take the news. It really depends on how motivated they are to sell.

    Bookmark   July 31, 2009 at 10:07PM
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Yes, that's what I thought....thanks!

    Bookmark   July 31, 2009 at 10:18PM
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I was selling a house in LA during the wild time of multiple offers. My realtor explained to me that when buyers offered so much over the asking price, they were counting on the appraisal to actually set the price of the house. As a seller, you really can't sell for over the appraisal, unless there are plenty of cash buyers around. Good luck

    Bookmark   August 1, 2009 at 11:14AM
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" What do you think the chances are that they won't come down to the appraisal price?"

Hard to say. You didn't mention the sales price, so we don't know how much of percentage reduction we are talking about. If it is only a few percentage points, they may come down without too much quibbling. On the other hand, if it is a significant percentage, then they may be very reluctant.

The only thing you can do is to politely offer them the appraisal price and hope they accept it.

    Bookmark   August 1, 2009 at 10:24PM
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It's about a 5% reduction

    Bookmark   August 1, 2009 at 10:40PM
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It is in their best interest to sell at the appraisal price, or they will have the same problem with the next buyers, unless they find cash buyers without wanting an appraisal.

The realtor should explain that to them.

It's not the realtor's fault. You can get 3 appraisals and they can come in differently.

    Bookmark   August 2, 2009 at 9:39AM
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I think they'll have to come down on price to at very most the appraisal price. The market here has dropped close to 10 % the last year so a 5% drop isn;t at all unreasonable. They should drop their price now rather than later- no one will be willing to pay more than the appraisal price in this market. And if I were you, unless you absolutely cannot live without this house, I would research how much your market has dropped and if it's greater than the 5% I would reoffer at that lowered price, justifying it with your research. Also it sounds like you may be stretching your budget a bit so make sure you can afford it. Good luck.

    Bookmark   August 2, 2009 at 9:59AM
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Good advice....we are in no way stretching our budget. This house is at the lower end of our budget.

    Bookmark   August 2, 2009 at 2:21PM
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Just to clarify, a bank will not lend you more than the house is worth (at least anymore?!?) That does not mean that you, or anyone else, can't pay more than an appraisal. All you have to do is bring some of your own money (usually equity from a prior home) to the table. Not too long ago, every buyer was bringing 20%+ to the deal. Now that many/most are hoping to finance 95%+, buyers really don't have much wiggle room and purchases can easily be torpedoed by a reluctant lender.

    Bookmark   August 3, 2009 at 9:33AM
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If you've been following the impact of HVCC since it took effect on May 1st, then you'd know this was coming. A good real estate agent keeps up on the news in the industry and this has captured headlines, so I think, YES, your agent should have had an idea this might happen. (google "HVCC" if you don't believe me)

Also, there have been several threads on this forum concerning appraisals. I personally had an appraisal come in $10K low and then the underwriter dropped it another $5K, so between the buyer and sellers, we had to come up with $15K cash and "closing help" to make the sale happen. The lender would only lend 80% of the appraisal price, so the rest has to be in cash.
Another sale in my neighborhood just fell through because the appraisal came in $22K (8%) below contract price. I'm anticipating the appraisal on my next contract to come in at least $5K low.

I'd suggest that you try to meet in the middle: put in another $5K cash and ask the sellers to add $5K help in closing costs. That way the contract price remains the same and will help keep the values up in the complex.
Good luck.

    Bookmark   August 3, 2009 at 11:44AM
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