What happens when the Appraisal comes in below Contract Price? I’m working with one of those situations now. The home was an inherited property and has been leased out for over 5 years. This owner used a property management company and that worked for him as far as rental collection and a few maintenance items. However the major items we’re not addressed, such as electric wires hanging from the ceiling, dripping water running along the ceiling from the air ducts condensation. Then there is rotten wood and a hole in the garage. The tenants lived with conditions that should have been taken care of but were afraid to say something. When they did say something the owner was cheap on repairs.
The home went on the market and the tenants moved along. Now the contract comes, while the market evaluation was done and the asking price was proper for the area and market the offer came in $10,000 below ask. The buyer being a conventional buyer had a good pre-approval, so the seller took the offer. This buyer had the inspection done and was willing to proceed in spite of known repairs that would need to be done. Next, in the process comes the appraisal. Whoops, there goes another $10,000 dollars. While appraisals are done with square footage, lot size, location, and current sales in the area condition play an important role in the overall appraised value.
Can an appraisal be contested, yes of course. If an appraiser sometime off in his assessment, yes he/she can be. You have a right to get your own appraiser and present that to the buyers lender, are those sometimes acceptable, sometimes.
What about the buyer paying over appraisal? Yes, that could happen. If the buyer really wants the property they can pay over appraisal.
Well, Appraisal Value. The answer to this story will have to continue on the next Blog.
Stay tuned and remember I’m always here for your questions. PaulaZ@WatsonRealtyCorp.com