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golddust

Appraisal came in under... What now?

golddust
10 years ago

It's only $3,000. but is it reasonable to ask the seller to credit the difference back to us? Our area is just coming out of the real estate blues and while there are comps in escrow that make our duplex look great, nothing comparable has sold.

Because its a duplex and investment property, we are putting 25% down. We must show we have six months of payments in the bank. We could split the difference but would rather not. ( Hey, it's California...)

What should we expect?

Comments (8)

  • kirkhall
    10 years ago

    3k? To me, that isn't really "under". That is right on.
    You could see if the seller will go 50/50, but really, is it worth losing from your end? Sounds like you are in an up market. In 6 mo are you going to find anything like what you have now?

  • golddust
    Original Author
    10 years ago

    No, it isn't worth letting it go, but sheesh! This is our first investment property and we didn't anticipate more than 20% down. We've stretched to 25% ( because it is a duplex) and can't imagine her walking away from the sell for $3,000. We are scheduled to close in a week and a half...

    We will offer to split it with her if she refuses to credit us the amount. The market is just coming back. Time to jump now, while prices are still low and interest rates favorable.

    Since we must have six months of payments in the bank and a business to run (10 employees), our comfort level has been tapped. But if push comes to shove, we wont walk for $3K. It's a very special property in a very good neighborhood.

  • LuAnn_in_PA
    10 years ago

    "can't imagine her walking away from the sell for $3,000"

    And they can't imagine YOU walking away from the buy for $3000.

    You could ask, but I wouldn't bite...

  • palimpsest
    10 years ago

    $3000 as a percentage of What? If it's $300,000 that's one percent.

  • golddust
    Original Author
    10 years ago

    Hopefully she will split it with us.

  • artemis78
    10 years ago

    $3K under is an excellent appraisal in our part of Northern CA (not high end but still pricey relative to the national market, so $3K is generally 1% or less), so it depends on where you are. Appraisals here seem to be trailing the market by quite a bit. We are refinancing and while we hit the number we needed to hit to get our loan, it came in 25% under what a practically perfect comp closed for the next week--the appraiser had included that property and another strong comp in escrow at their asking prices in the calculation, but both closed well above asking. Had we actually been trying to sell, we would have been SOL with a financed offer.

    If it's a special property in a good neighborhood and your market is on the rise the way ours is, I would offer to split it, and if they decline, then just eat it. In a normal market sellers would be crazy to walk and jump back into the fray, but with low inventory, there's a decent chance that they'll get a new offer that's even higher or cash, so it might be a risk they'll take if they know the property is a good one and there are other properties in escrow that support the price and will have closed before the next appraisal. interest rates are also in flux right now, so waiting could have a cost for you, too. Good luck!!

  • _sophiewheeler
    10 years ago

    If 3K is pinching you on this deal, then you need to take a second look at the cash flow you expect from this. You need a lot more capital to manage a rental than most people think.

  • golddust
    Original Author
    10 years ago

    Holly springs, thank you for your concern. We are fine financially.We can't afford to make money from this investment right now. Naive? Bingo!

    Artemis, we are also in Northern CA. (Gold Country) You described our market correctly. Things are starting to take off here and inventory is just starting to increase but good listings seem few and far between. There are two properties that would be perfect comps but they are still in escrow.

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