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Old 06-08-2011, 01:29 AM
Glory Glory is offline
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Sad - losing a gorgeous house, didn't appraise for asking price

My husband and I have been house hunting for nearly 2 years with extraordinarily bad luck. We had a verbal acceptance of an offer reneged on. We built a new home and lost it when my husband got laid off 2 weeks before closing. We've been outbid, we've had crazy counters, it's been nuts.

Last week, we found a great house, good location, been on the market since February. We offered within 5K of the asking price and they accepted the same day.

We were pre-approved for the mortgage, so we immediately got the home inspection (everything checked out) and got the appraisal ordered. Everything was rolling along, until we got the appraisal - 40K less than our contract price.

Our banker chirpily told us the bank would still finance our loan, if we came up with the 40K difference out of pocket. That's just crazy talk 1) we don't have an extra 40K 2) who would buy a house for 40K more than it appraised?

We offered the sellers 10K above the appraisal price (10K that we would pay out of pocket) and told them they didn't have to make any repairs on the repair list (which was short, anyways). Their realtor told us that she could sell that house all long for close to the asking price (10K under) and that she would advise her clients to reject our offer. She suggested we work with ANOTHER lender, but I don't see the point of that. Appraisers use the same comps and the same formulas, I don't want to pay another appraisal fee to get another crappy number the sellers won't accept.

So, I'm pretty bummed. I loved the house (great kitchen, gorgeous landscaped backyard, 20 minutes to work). I think the sellers aren't being realistic about the market - Zillow (although not perfect) had nearly exactly pegged the appraisal value. The house right next door sold last summer for 20K less than their asking price (and it had and extra bedroom, and a pool!). The sellers had willing and able buyers on the hook and we're going to walk away from this escrow. I don't want to pay more than the home is worth, but man, it's still heartbreaking. I feel bad for the sellers too, it's a lovely home and they put in a lot of time and upgrades. How sucky for them their pretty house isn't worth what they think it is!

Last edited by Glory; 06-08-2011 at 01:31 AM..
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Old 06-08-2011, 02:19 AM
EvilTOJ EvilTOJ is offline
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I've never understood how if a house appraises for less the lender won't fund it. I mean, you'd think they'd be thrilled, right? It means you're more likely to keep paying on the loan rather than go into foreclosure. Greedy, lazy motherfuckers they is.
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Old 06-08-2011, 02:45 AM
Tabby_Cat Tabby_Cat is offline
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Uhh.. what? Why would the bank lend you more money than it's secured for?

If the bank lends you more than the house is worth, and you can't pay, the bank sells and.. doesn't get its money back!
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Old 06-08-2011, 04:48 AM
Waenara Waenara is offline
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I've never bought a house, but hopefully I'll be able to in a couple years. So this may be a stupid question - is it possible to get an appraisal before you make an offer and get an inspection and everything? Or does the appraiser need to have a home inspection report so they can make an accurate appraisal?

It just sucks to go through all of the steps and then have the appraisal be the last thing that derails the whole deal.

And is this appraisal thing a recent addition to the house-buying process (post-housing bubble burst)? Like I said, I've never bought property, but from my extensive HGTV-watching experience, it seems like no one ever mentioned appraisals on any home-buying tv shows before a couple months ago (likely taped a while before that).

And what happens when there's a bidding war on a house? By definition, isn't a house worth what someone is willing to pay for it? Would an appraiser just tell them they're wrong and it's not really worth that much?

And as far as the bank getting an appraisal because they want to be sure the house is worth the amount of the mortgage, in case the bank has to step in and sell the house and get their money back - there's no guarantee that the appraised value today will be the same 6 months or a few years from now. The appraisal today could be 100% accurate and they approve the loan - but if the market goes down further in your area, the bank still won't get their money back.

Last edited by Waenara; 06-08-2011 at 04:50 AM..
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Old 06-08-2011, 06:49 AM
Athena Athena is online now
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Originally Posted by Waenara View Post
I've never bought a house, but hopefully I'll be able to in a couple years. So this may be a stupid question - is it possible to get an appraisal before you make an offer and get an inspection and everything? Or does the appraiser need to have a home inspection report so they can make an accurate appraisal?
Sure you can. You can get an appraisal anytime you want, assuming the homeowners are OK with it. But an appraisal costs about $300 (at least around these parts), so it's not really something you want to do unless you're really interested in buying the house.
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Old 06-08-2011, 07:06 AM
Waenara Waenara is offline
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Sure you can. You can get an appraisal anytime you want, assuming the homeowners are OK with it. But an appraisal costs about $300 (at least around these parts), so it's not really something you want to do unless you're really interested in buying the house.
I was just thinking that if you can get an appraisal at the beginning of the process instead of at the end, then you can bargain better. If it appraises $30K under the asking price, then you can make your starting offer $40K or $50K under asking and know where your bargaining limit is. And then if the homeowners refuse to go that low on the price, at least you haven't wasted quite as much time. And maybe an appraisal is cheaper than a home inspection, getting a lawyer to check over all the paperwork, etc...

But I can't help wondering what the current homeowners should do next. Presumably they've lost this buyer. Now what? Are they going to try to find someone else to pay the appraised price? Get another person who agrees to a higher price and hope the next re-appraisal is a higher price? Find someone willing to pay more than the appraised value? Frankly, I can't image why anyone would pay a lot out of pocket to pay more than the house is worth, unless they're desperate to get that particular house.

Last edited by Waenara; 06-08-2011 at 07:08 AM..
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Old 06-08-2011, 07:16 AM
Antigen Antigen is offline
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Can you appeal the appraisal? I know someone who's in that process now, because the house they made an offer on was appraised for 20k less than their offer. In their case, the only other house that sold in the area in the past 4 months was a short sale, and that's all the appraisers compared it to, so they're appealing to have them look further back in time or further out in area to have a more accurate representation. Do you know what comps were used in the appraisal? Were there a lot of short sales and foreclosures?
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Old 06-08-2011, 07:26 AM
Musicat Musicat is online now
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Here's how to do it (Realtor talking here). Write an offer for what you think it is worth and what you are willing to pay. Include in the offer the contingency that it must appraise for $X and/or must pass inspection. Optionally, you may include the "right to cure" by the Seller, so if anything is found faulty, they may fix it at their expense.

You can ask the Seller to pay for any of these items as a condition of offer acceptance -- of course, they can refuse.

If it doesn't appraise, you can renegotiate.

I had two offers recently that didn't appraise for the amount of the contract. In one case, the Seller reduced the price and the deal went through. In the other, the Seller said, "No way," and took it off the market.

One incentive for a Seller to accept a lower price is if they don't, they will have to find an all-cash Buyer; one who doesn't need any financing. Those are far fewer than financing Buyers. So it might be in their best interest to accept a lower price rather than none at all.
Quote:
Originally Posted by Antigen
Can you appeal the appraisal?
Appeal to whom? The bank hired an expert. You can try another appraiser, but why would the bank consider that? And it might appraise about the same. All appraisers have access to the same public records and only a small part of their job is raw opinion.

And a short sale isn't necessarily a bad comp. If the only sales in the area are short, then those are the prices buyers are willing to pay.

A bad comp is one that isn't an arm's-length transaction, like from a parent to a child.

The only chance you have is to prove the appraiser incompetent by finding a comparable sale in your favor he overlooked. Maybe he didn't measure right. Maybe he omitted something. Possible, but not likely.

Last edited by Musicat; 06-08-2011 at 07:28 AM..
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Old 06-08-2011, 07:58 AM
Merneith Merneith is offline
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Their realtor told us that she could sell that house all long for close to the asking price (10K under) and that she would advise her clients to reject our offer.
I think their realtor is delusional. Also, she's probably the one who set the asking price in the first place and doesn't want to lose money on her commission. The house has been on the market for five months - clearly, she *can't* sell the house at close to asking price "all day long". Good luck finding a buyer with $40k cash who enjoys overpaying on property!

Keep an eye on the house while you continue to shop around. In a few months, they might change realtors or drop their price after all.
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Old 06-08-2011, 08:46 AM
Renee Renee is offline
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We offered the sellers 10K above the appraisal price (10K that we would pay out of pocket) and told them they didn't have to make any repairs on the repair list (which was short, anyways). Their realtor told us that she could sell that house all long for close to the asking price (10K under) and that she would advise her clients to reject our offer. She suggested we work with ANOTHER lender, but I don't see the point of that. Appraisers use the same comps and the same formulas, I don't want to pay another appraisal fee to get another crappy number the sellers won't accept.
So, did the realtor actually present your counter offer, or just tell the sellers that it wasn't worth it? Did the buyers just reject the counter out of hand, or did they re-counter? This realtor sounds kind of bad.
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Old 06-08-2011, 09:01 AM
sachertorte sachertorte is offline
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I think you are in a good position. It sucks emotionally, but rationally you do not want to pay more than the house is worth! Don't think of it as losing a house (you didn't lose anything!). Think of it as dodging a bullet.

Keep an eye on it. If the sellers need to sell, they will come around. Heck, stick with the appraised value as your offer and see if they will counter with appraised + 10. You are in the driver's seat here.

Plus, as nice as this house seems to you now. Another excellent house will come along sooner or later.
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Old 06-08-2011, 09:12 AM
35 U.S.C. 35 U.S.C. is offline
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So, did the realtor actually present your counter offer, or just tell the sellers that it wasn't worth it? Did the buyers just reject the counter out of hand, or did they re-counter? This realtor sounds kind of bad.

The Realtor is likely legally bound to present all offers to the sellers. But really, without contacting the sellers directly, how could the buyer ever know for sure?
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Old 06-08-2011, 09:21 AM
Glory Glory is offline
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Originally Posted by Renee View Post
So, did the realtor actually present your counter offer, or just tell the sellers that it wasn't worth it? Did the buyers just reject the counter out of hand, or did they re-counter? This realtor sounds kind of bad.
Thanks for all the responses - I was a little tired of the emotional house hunting roller coaster last night.

At the time the selling agent spoke to our realtor, she had not presented our counter to the sellers. She told our agent she would suggest they reject the offer. They have until tomorrow at 6:00pm to officially respond.

A lot of people posted with great answers - like, the bank won't finance a loan for over market value because if we default, they won't be able to sell the house to recoup their money. Sure, a buyer with lots of cash can buy a house that appraises for less, but they have to make up the difference. If you have a lot of cash and really love the house, it's an option (but I don't think it's a good idea for us).

I'm biased, but of course I think the seller should consider our offer and will be disappointed when they reject it. Appraisers use the same formulas and comps, so if they get another buyer and a different lender and a new appraisal, there is a good chance the house will appraise for a similar amount (even if our appraiser was 10% off, that's still only 10K - which we offered). We're pretty sure we were the first buyers to get an offer accepted and get to the appraisal stage, I bet it was a horrible "sticker shock" moment for the sellers (who seem to be very nice people).

In an amusing turn, there is ANOTHER house on the same street with a similar floorplan that came on the market 4 days ago. Those sellers are asking 20K under our sellers asking price. The house is farther up the street (so will have less road noise than our first house - you could hear highway 78 from the backyard), but doesn't have as many upgrades (no crown molding, no travertine, no beautiful landscaping). It still has my dream kitchen (with amazing center island), huge walk in pantry and this laundry room is upstairs (which I consider a plus). We're going to go look at it at lunch, it doesn't have the "wow" factor of my dream house, but the bones are there - we can always put down tile and paint walls.

Last edited by Glory; 06-08-2011 at 09:22 AM..
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Old 06-08-2011, 09:27 AM
lost4life lost4life is offline
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Originally Posted by Antigen View Post
Can you appeal the appraisal? I know someone who's in that process now, because the house they made an offer on was appraised for 20k less than their offer. In their case, the only other house that sold in the area in the past 4 months was a short sale, and that's all the appraisers compared it to, so they're appealing to have them look further back in time or further out in area to have a more accurate representation. Do you know what comps were used in the appraisal? Were there a lot of short sales and foreclosures?
We needed an appraisal in order to get our private mortgage insurance removed. The person they hired did a half-assed job, missed some major features of the house, and used houses totally different from ours in size, location and features as price comparisons. I don't know if you could call it an appeal, but we certainly bitched enough that they made some changes and raised our assessment.
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Old 06-08-2011, 09:31 AM
It's Not Rocket Surgery! It's Not Rocket Surgery! is offline
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Originally Posted by Glory View Post
I'm biased, but of course I think the seller should consider our offer and will be disappointed when they reject it. Appraisers use the same formulas and comps, so if they get another buyer and a different lender and a new appraisal, there is a good chance the house will appraise for a similar amount (even if our appraiser was 10% off, that's still only 10K - which we offered).
The appraisal came in 40k low on a house in the 100k range?

Quote:
Originally Posted by Glory View Post
In an amusing turn, there is ANOTHER house on the same street with a similar floorplan that came on the market 4 days ago. Those sellers are asking 20K under our sellers asking price. The house is farther up the street (so will have less road noise than our first house - you could hear highway 78 from the backyard), but doesn't have as many upgrades (no crown molding, no travertine, no beautiful landscaping). It still has my dream kitchen (with amazing center island), huge walk in pantry and this laundry room is upstairs (which I consider a plus). We're going to go look at it at lunch, it doesn't have the "wow" factor of my dream house, but the bones are there - we can always put down tile and paint walls.
I hope it works out - it already sounds like a better situation; you can always put in crown molding and landscaping, but you can't move the interstate!
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Old 06-08-2011, 09:55 AM
Moonlitherial Moonlitherial is offline
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Originally Posted by It's Not Rocket Surgery! View Post


I hope it works out - it already sounds like a better situation; you can always put in crown molding and landscaping, but you can't move the interstate!
This 100%. You can make it your dream home inside but you don't have much impact on external factors.
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Old 06-08-2011, 10:02 AM
Glory Glory is offline
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Originally Posted by It's Not Rocket Surgery! View Post
The appraisal came in 40k low on a house in the 100k range?
We offered the appraised amount +10K and the removal of repairs. We live in Southern CA, I wish there were great homes for 100K!
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Old 06-08-2011, 10:28 AM
Moonlitherial Moonlitherial is offline
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I think he was referring to:

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Originally Posted by Glory View Post
(even if our appraiser was 10% off, that's still only 10K - which we offered).
Which made it sound like the house was in the 100k range. Bad math is forgivable under the circumstances however
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Old 06-08-2011, 10:52 AM
Mama Zappa Mama Zappa is online now
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Originally Posted by Glory View Post
...
In an amusing turn, there is ANOTHER house on the same street with a similar floorplan that came on the market 4 days ago. Those sellers are asking 20K under our sellers asking price. The house is farther up the street (so will have less road noise than our first house - you could hear highway 78 from the backyard), but doesn't have as many upgrades (no crown molding, no travertine, no beautiful landscaping). It still has my dream kitchen (with amazing center island), huge walk in pantry and this laundry room is upstairs (which I consider a plus). We're going to go look at it at lunch, it doesn't have the "wow" factor of my dream house, but the bones are there - we can always put down tile and paint walls.
Ha! Sounds like *that* one is the one you need to buy - the traffic noise is a non-remediable defect (not sure that's the official term - but it refers to things you can't change like being on a busy intersection, train tracks, paper mill next door etc.).

And as you noted: you can always put down tile, paint walls, add crown molding, and do the landscaping. In fact you can do most of that *yourselves* and save a bundle. Go for it!!
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Old 06-08-2011, 10:55 AM
Mama Zappa Mama Zappa is online now
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... By definition, isn't a house worth what someone is willing to pay for it? ...
A funny (?) side story: a friend is trying to sell their house - and it's been on the market for well over a year. It's a depressed area where larger houses simply aren't selling. Yet they had it appraised for a refinance - and the appraisal came in at something like 80K *more* than they'd listed it at while trying to sell. So it came in at a higher figure than the place could sell for. Odd.
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Old 06-08-2011, 10:56 AM
Oredigger77 Oredigger77 is online now
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People are crazy when it come to their homes. I had an offer in on a 970 sqft studio on 10 acres earlier this year that the owner was insisting was worth 750K. She was wildly insulted when I showed her comparison houses and property that were being offered for 400K and I offered 450K after it had been on the market for 7 months. It's still on the market 3 months later.

Good luck wait it out, the owners will come around or you'll find a better place.

Last edited by Oredigger77; 06-08-2011 at 10:58 AM.. Reason: timing info
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Old 06-08-2011, 11:07 AM
gurujulp gurujulp is offline
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Originally Posted by Musicat View Post
Here's how to do it (Realtor talking here). Write an offer for what you think it is worth and what you are willing to pay. Include in the offer the contingency that it must appraise for $X and/or must pass inspection. Optionally, you may include the "right to cure" by the Seller, so if anything is found faulty, they may fix it at their expense.

You can ask the Seller to pay for any of these items as a condition of offer acceptance -- of course, they can refuse.

If it doesn't appraise, you can renegotiate.

I had two offers recently that didn't appraise for the amount of the contract. In one case, the Seller reduced the price and the deal went through. In the other, the Seller said, "No way," and took it off the market.

One incentive for a Seller to accept a lower price is if they don't, they will have to find an all-cash Buyer; one who doesn't need any financing. Those are far fewer than financing Buyers. So it might be in their best interest to accept a lower price rather than none at all.Appeal to whom? The bank hired an expert. You can try another appraiser, but why would the bank consider that? And it might appraise about the same. All appraisers have access to the same public records and only a small part of their job is raw opinion.

And a short sale isn't necessarily a bad comp. If the only sales in the area are short, then those are the prices buyers are willing to pay.

A bad comp is one that isn't an arm's-length transaction, like from a parent to a child.

The only chance you have is to prove the appraiser incompetent by finding a comparable sale in your favor he overlooked. Maybe he didn't measure right. Maybe he omitted something. Possible, but not likely.
Appraisers are NOT professionals, in most cases.

I have known several, and they were minimum wage slaves until they learned that county records were free. They then walk through a house, compare it to recent home sales in the neighborhood, and pull a price out of their ass.

I have had several well respected appraisal companies attempt to hire me based on my work in gov't and county records, etc...

There is a wild variation in what you will get from an appraiser, and they are very open to suggestion.
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Old 06-08-2011, 11:20 AM
It's Not Rocket Surgery! It's Not Rocket Surgery! is offline
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Ha! Sounds like *that* one is the one you need to buy - the traffic noise is a non-remediable defect (not sure that's the official term - but it refers to things you can't change like being on a busy intersection, train tracks, paper mill next door etc.).
The appraisal term is "external obsolescence".
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Old 06-08-2011, 12:29 PM
lindsaybluth lindsaybluth is offline
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OP, I can definitely feel your pain. My parents are trying (emphasis on trying) to buy a home and every time it seems as though "this one is it!" something happens out of their control. I'm involved in the process quite a bit so it's shocking to me that people.....can be so stupid.

Example 1: Home is listed for X+Y dollars. Homes in area have sold for X dollars. Parents make a bid for 8% lower than X dollars, assuming they'll settle at X dollars. Owner counteroffers X+Y dollars - 1% . Owner is not rational; she was a secretary who married a dying rich guy and inherited lots of $. How can you deal with an irrational person?

Example 2: Homeowner accept bid and then doesn't want to move for 2 months. Homeowners are empty nesters with grown children, NOT children in school or even in college. WTF? House has been on the market for a year. They will. not. budge on the moveout date.

Example 3: Builder owes contractors $, won't release new homeowner from liability of contractors going after new owner.

Your house is out there, that just wasn't it....

ETA: Hope the lunch viewing of the new house with potential works out!

Last edited by lindsaybluth; 06-08-2011 at 12:33 PM..
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Old 06-08-2011, 12:37 PM
Pai325 Pai325 is offline
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We had that happen, but we were the sellers. It ended up that the appraiser had just moved to our small town from the big city of Indianapolis and couldn't believe anything in West Lafayette was worth any money, so he appraised way low. Our lawyer arranged for another appraiser to look it over and we had no problems.
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Old 06-08-2011, 01:21 PM
Cat Whisperer Cat Whisperer is online now
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Originally Posted by Mama Zappa View Post
Ha! Sounds like *that* one is the one you need to buy - the traffic noise is a non-remediable defect (not sure that's the official term - but it refers to things you can't change like being on a busy intersection, train tracks, paper mill next door etc.).

And as you noted: you can always put down tile, paint walls, add crown molding, and do the landscaping. In fact you can do most of that *yourselves* and save a bundle. Go for it!!
Agreed. If the houses are similar, you can make your *wow* factor yourself, on your own schedule, with your own budget.

If appraisers are like house inspectors, they definitely aren't all equally professional. When we were selling our house two years ago, the first people who offered on it brought in their own "inspector," who we suspect was a relative of the buyers. He did what was basically a fraudulent inspection - lying about the condition of the house to force us to reduce our price. We wised up and got our own inspection done with a qualified inspector, and found that none of the original inspection was true (which is what we thought all along - the fraudulent inspector was saying things like the foundation was cracked and the shingles needed replacing). We'll do that in the future - it's worth it to pay the couple of hundred dollars it cost to not have someone trying to scam you with a fake home inspector.

If appraisals have become something that you have to have done to buy a house, you need to know what houses are worth and what they're selling for in the area that you're trying to buy in to protect yourself.
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Old 06-08-2011, 01:55 PM
picunurse picunurse is offline
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I thought banks got their pee pees slapped over financing houses worth less than appraised. Isn't it illegal now?
Isn't that what caused the housing boom to bust?
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Old 06-08-2011, 04:51 PM
Xema Xema is online now
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Originally Posted by Merneith View Post
I think their realtor is delusional. Also, she's probably the one who set the asking price in the first place and doesn't want to lose money on her commission.
Possible, but unusual. The normal story is that the agent wants to list the house at something below its market value - that generates a quick sale and a quick commission requiring minimal time & effort.
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Old 06-08-2011, 05:20 PM
echoreply echoreply is offline
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Sometimes it takes the real estate agent and sellers a while to come to grips with what their house is actually worth. The market has taken big hits, and is still going down almost everywhere. Unless the appraiser was making invalid comparisons, you just need to wait out the sellers. They'll either decide they want out of the house and will lower their price, or that they'd rather not sell in this market.

The house I'm sitting in right now, we made an offer on, and the seller's agent didn't even bother to respond with a counter offer, because we were too low. Two months later we were closing at our offer price. This represented a price drop of about 20% from the seller's original asking price. Zillow, our real estate agent, us and the appraiser all agreed on what the house is worth. It was only the seller and her agent who had to come to terms with its current value.

Do like us, keep looking, but be sure and check back with the house you like. After our offer was ignored, the selling agent said the house was getting good traffic, but we viewed it again two weeks later, and it was clear nobody else had been inside since the last time we'd been there. We didn't call the selling agent's bluff, so much as let her come around on her own, and bring the seller with her.
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Old 06-08-2011, 05:44 PM
echoreply echoreply is offline
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I forgot to mention, we weren't aggressive or condescending to the seller or her agent (though we did a lot of WTF? in private). We just kept telling her that our offer was as much as we could afford, that it was a beautiful house, and we wished them luck.

In your position, maybe keep telling the sellers that the appraisal + $10k, or whatever is as much as you can afford, because that's as much as any bank's going to loan for the house. This lets them save face, in that it's not them who think the house is worth too much, but that they've begrudgingly accepted the offer available to them.
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Old 06-08-2011, 08:45 PM
koeeoaddi koeeoaddi is online now
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Originally Posted by sachertorte View Post
I think you are in a good position. It sucks emotionally, but rationally you do not want to pay more than the house is worth! Don't think of it as losing a house (you didn't lose anything!). Think of it as dodging a bullet.

Keep an eye on it. If the sellers need to sell, they will come around. Heck, stick with the appraised value as your offer and see if they will counter with appraised + 10. You are in the driver's seat here.

Plus, as nice as this house seems to you now. Another excellent house will come along sooner or later.
This, with a cherry on top!

That said, Glory, man, oh man, I totally feel your pain. Mr. Ko and I have made numerous offers, have been undercut by investors, put off by banks on short sales, [probably] lied to about competing offers on bank owned homes and have toured more dumps than you can shake a crummy counter offer at. We are both mightily weary of the whole process, but still, I'd have to say that for each failed transaction, as sucky as each one was, we really did wind up dodging a substantial financial bullet. It's a crazy market and it's still declining, so we continue to rent and look and look and look. I dunno, Glory, your circumstances may be different than ours, but speaking for myself, I'd rather stay on the merry-go-round a while longer than pay 40K more than any house is worth.
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  #32  
Old 06-08-2011, 11:39 PM
ioioio ioioio is offline
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It’s possible the sellers cannot afford to lower the price.

The people I bought my house from were in debt up to the asking price – actually beyond, as it turned out. They had taken out a second mortgage and made very expensive modifications to the house, which they’d put on their credit cards! After they moved to another state, they stopped making payments on the house for over a year. They knew they had to cover the missed payments, but didn’t realize – until closing day! – that they also had to pay substantial penalties. Rather than lose money, they were willing to walk away from the deal and let the bank foreclose on the house. I wound up paying several thousand dollars above the agreed upon price to get the house.

Later, I heard they'd gone bankrupt.

I’ve lived here for 10 years and right now, due to the economy, the house is appraised at less than I still owe.
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  #33  
Old 06-09-2011, 12:42 PM
Glory Glory is offline
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Quick update:

We did check out the other house, but the same day, the sellers accepted our lower offer (appraisal +10K). I'm very excited, we are getting a great house with a lot of fabulous upgrades for a really good price.
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Old 06-09-2011, 01:04 PM
NinetyWt NinetyWt is offline
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Yay! I love happy endings.
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Old 06-09-2011, 01:10 PM
Cat Whisperer Cat Whisperer is online now
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Yay indeed!
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Old 06-09-2011, 01:14 PM
Peremensoe Peremensoe is offline
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Quote:
Originally Posted by Glory View Post
How sucky for them their pretty house isn't worth what they think it is!
But you offered "within 5K of the asking price and they accepted"... and then you changed your mind, is that right? Why would you make an offer without having a clear idea of what you thought it was worth?

Last edited by Peremensoe; 06-09-2011 at 01:15 PM..
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Old 06-09-2011, 01:19 PM
Peremensoe Peremensoe is offline
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Quote:
Originally Posted by Mama Zappa View Post
A funny (?) side story: a friend is trying to sell their house - and it's been on the market for well over a year. It's a depressed area where larger houses simply aren't selling. Yet they had it appraised for a refinance - and the appraisal came in at something like 80K *more* than they'd listed it at while trying to sell. So it came in at a higher figure than the place could sell for. Odd.
Right. The real estate industry has a long way to go to adjust to the new norms, which are still in motion anyway. The relationship between appraisals and practical value at this point is pretty theoretical.
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Old 06-09-2011, 01:40 PM
PunditLisa PunditLisa is offline
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So it looks like the appraiser saved you $30k. Congratulations!
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Old 06-09-2011, 01:58 PM
Rachellelogram Rachellelogram is offline
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Quote:
Originally Posted by Glory View Post
Quick update:

We did check out the other house, but the same day, the sellers accepted our lower offer (appraisal +10K). I'm very excited, we are getting a great house with a lot of fabulous upgrades for a really good price.
omg yaaaay! congrats!
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Old 06-09-2011, 02:14 PM
Glory Glory is offline
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Quote:
Originally Posted by spark240 View Post
But you offered "within 5K of the asking price and they accepted"... and then you changed your mind, is that right? Why would you make an offer without having a clear idea of what you thought it was worth?
Okay, I'm not a Realtor, but our contract clearly stated that the house has to appraise for the sale price or we wouldn't have to through with the deal (this is standard). The house did NOT appraise so we renegotiated the selling price. Both us as buyers and the sellers acted correctly and in good faith.
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Old 06-09-2011, 04:11 PM
koeeoaddi koeeoaddi is online now
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Congratulations on your new place, Glory!
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Old 06-10-2011, 06:52 PM
Bear_Nenno Bear_Nenno is offline
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Quote:
Originally Posted by spark240 View Post
But you offered "within 5K of the asking price and they accepted"... and then you changed your mind, is that right? Why would you make an offer without having a clear idea of what you thought it was worth?
Because the offer is dependant on lender approval. When you make an offer on a house, it is like saying "I will pay this much if the bank will lend it to me." And the bank won't lend more than the house is worth. Everyone in the industry understands this, and it is even written somewhere on the official Offer. That's why you have to get a "pre-approval" letter. This letter at least shows that there is a bank willing to lend you up to a certain amount. However, even that amount is dependant on the value of the house. The bank will give you a letter saying they will lend you $300,000. But they aren't going to lend you that much to buy a 150,000 dollar home. And the approval letter will say such.
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  #43  
Old 06-10-2011, 09:45 PM
kitchen66 kitchen66 is offline
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Quote:
Originally Posted by Musicat View Post
Here's how to do it (Realtor talking here). Write an offer for what you think it is worth and what you are willing to pay. Include in the offer the contingency that it must appraise for $X and/or must pass inspection. Optionally, you may include the "right to cure" by the Seller, so if anything is found faulty, they may fix it at their expense.

You can ask the Seller to pay for any of these items as a condition of offer acceptance -- of course, they can refuse.

If it doesn't appraise, you can renegotiate.

I had two offers recently that didn't appraise for the amount of the contract. In one case, the Seller reduced the price and the deal went through. In the other, the Seller said, "No way," and took it off the market.

One incentive for a Seller to accept a lower price is if they don't, they will have to find an all-cash Buyer; one who doesn't need any financing. Those are far fewer than financing Buyers. So it might be in their best interest to accept a lower price rather than none at all.Appeal to whom? The bank hired an expert. You can try another appraiser, but why would the bank consider that? And it might appraise about the same. All appraisers have access to the same public records and only a small part of their job is raw opinion.

And a short sale isn't necessarily a bad comp. If the only sales in the area are short, then those are the prices buyers are willing to pay.

A bad comp is one that isn't an arm's-length transaction, like from a parent to a child.

The only chance you have is to prove the appraiser incompetent by finding a comparable sale in your favor he overlooked. Maybe he didn't measure right. Maybe he omitted something. Possible, but not likely.
I have another question on this topic ... what about when the public records are incorrect and you have the permits that show that the records are incorrect and the appraiser refuses to look at them??? We are in that situation right now. The public records show our home as a 3 bed /1 bath. We had the 1937 permits pulled which shows the addition of a bedroom and bathroom.... making it a 3 bed/2 bath. The buyers' mortgage broker said the difference of the additional bath on the records would put the house's value up to the same price as the contracted price. We filed a change of Property Data request with the county as well. Now the appraiser is asking for records that the county didn't keep track of until 1940. This is the first time we have ever sold a house and we bought our home over 12 years ago. It seems to my that it is the appraisal that has all the power .... but what can you do when one doesn't want to budge at all, even the buyers' mortgage broker isn't happy with this appraiser. Any suggestions??? Thanks in advance.
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Old 06-10-2011, 09:57 PM
kitchen66 kitchen66 is offline
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Quote:
Originally Posted by lost4life View Post
We needed an appraisal in order to get our private mortgage insurance removed. The person they hired did a half-assed job, missed some major features of the house, and used houses totally different from ours in size, location and features as price comparisons. I don't know if you could call it an appeal, but we certainly bitched enough that they made some changes and raised our assessment.

Good to know that you had success!
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Old 06-10-2011, 10:02 PM
Mama Zappa Mama Zappa is online now
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Quote:
Originally Posted by kitchen66 View Post
I have another question on this topic ... what about when the public records are incorrect and you have the permits that show that the records are incorrect and the appraiser refuses to look at them??? We are in that situation right now. The public records show our home as a 3 bed /1 bath. We had the 1937 permits pulled which shows the addition of a bedroom and bathroom.... making it a 3 bed/2 bath. The buyers' mortgage broker said the difference of the additional bath on the records would put the house's value up to the same price as the contracted price. We filed a change of Property Data request with the county as well. Now the appraiser is asking for records that the county didn't keep track of until 1940. This is the first time we have ever sold a house and we bought our home over 12 years ago. It seems to my that it is the appraisal that has all the power .... but what can you do when one doesn't want to budge at all, even the buyers' mortgage broker isn't happy with this appraiser. Any suggestions??? Thanks in advance.
Can you complain to the mortgage company that the appraiser is OBVIOUSLY overlooking data? I mean, the appraiser could, if he set foot in the place, see that there is indeed a second bathroom, right? Or is the appraiser arguing that the second bath might not be legal so therefore can't be counted toward the value? It really sounds like you have grounds for having that appraisal overturned.
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