Appraisal Came In LOWER Than Sales Price (WHAT HAPPENS NEXT AND WHAT TO DO)
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- čas přidán 26. 03. 2019
- Buying or selling a house can be stressful, especially during the offer process. What should I offer? Am I paying too much? How do I know? What do I do if the appraiser says my house is worth less?
In this video I answer the vital question - when an appraisal came in lower than sales price - what happens? What are a buyer or seller's options?
I'll break it down from both the buyer's and seller's perspectives!
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In today’s market ( not 2 years ago) there’s bidding wars and waiving the appraisal, I had to pay 80k difference .. houses are being sold for 50 to 100k above the normal price
Should have waited til now. Rates are high but you can do rate buy down.
Very good job explaining what will happen if the appraisal comes in lower than the sales price!
This was 🔥🔥🔥. As a new agent I would like to thank you
Found you in the comments of another realtor's CZcams and you were so polite I had to check out your channel. Glad I did!!
Trina Horton thanks Trina! Appreciate that - means a lot and glad you came over!
Awesome simple explanation!!
Some good points here. However, In this market, you are not going to convince any sellers to reduce the price.
Watching this in March 2021 and thinking just how wrong this is right now - right now appraisers can’t keep up with the increasing prices
Lack of inventory
Agreed. I bid 8% more than asking and the property is still the cheapest among its category so I don't understand how it came lower because this property had 3 other bidders within 3 days.
@@duthegee due to regulations I cant tell you whether I’m an appraiser or if I’m not an appraiser (people commenting on this page saying they’re appraisers can be fined, Dodd-Frank stuff) but appraisers can’t make up numbers, we look in the past for market value, best situation is 3 sales that sold yesterday, that doesn’t happen. We make market adjustments but simply, appraisers are a third party hired by the bank, but ultimately looking out for the consumer. As in.. overpaying for a property is not in the consumers interest. As always though, those who can pay cash will get the property. Good luck
Thanks for the info!
Crystal clear , thanks for the information !!
You're very welcome! Happy to know it was helpful!
Clear and concise. Thank you
Thanks for explaining this Sam! Do you have any tips for me as the seller and doing anything prior to the appraiser coming to my house to appraise it?
There's a dot on the wall behind you and I kept thinking it was something on my screen. Thank you for that.
By far the best detailed video
Good job Sam...great info
Very clear explanation!
Thank you, Angela! And thanks for watching!
Love your point @ 7:42. You have to go with want you can control. 1 off dream scenarios could slow down the process and hurt you in the long run. Great vid! 😀
Thanks a lot! And EXACTLY, it can be tempting to try to achieve everything possible but end up failing in the process. Thanks for watching, too!
Our buyer just had their appraisal. We had an appraisal done too before going into contract just to be on the safe side since we are doing FSBO. Their appraisal came in $13,000 less than our appraisal did. Our appraisal occurred in two stages. Someone came out and took measurements of the outside and inside of the house, sketched the house, notating where the rooms are and then the appraiser came and took photos, notated updates, etc. Their conventional loan appraiser came out with a camera and was gone in less than 20mins. Our house appraised less than the home across the street from ours and the one around the corner. It appraised lower than any of the homes in our neighborhood. I'm so glad that we chose to get our home appraised. If not, we'd be getting cheated out of a lot of money.
Great video 🔥💪🏿🔥🔥🔥
Great topic!!!!
Thank you, Kerri!
On a conventional loan if the appraisal comes in lower than the asking price a another appraisal can be asked for but when it comes to FHA loans that appraisal/home inspection stays with the house for 90 to 120 I have heard and that can not change.
Not an appraiser only sold two houses owned both outright. I set the price appraiser could say whatever they like I set the price. Not trying to be cocky or sound like I know better than some professional real estate person just saying I own the house if you want to buy this is what it's going to cost. I also negotiated the closing cost with the agent but thats another story. Everything is negotiable If your not desperate to buy or sell your the boss it's your money!
This is perfect explaining. Thank you. Who in their right mind disliked this video? Lol
I really hope mine does, but that luck doesn’t come my way 😅
I've never had luck disputing an appraisal!
I think I have once, twice at the most. But SO hard to do!
Good info thank you
702Truee you’re very welcome!! I’m glad it helped you 😃
You say the fha appraisal stays with it for 6 months how long does a va appraisal stay with the home? Thanks
Or the seller could renegotiate the contract with the listing agent. Maybe they would lower their commission.
Very informative Sam! Enjoy your pancakes!!
My Front Range Living you know I am!!!!!
What if you have an appraisal guarantee, and it appraises for less than how much you set your guarantee for?
When I pay for a service and get a professional opinion I would think more than one would be a welcomed approach. Though it is not. Also, the fact you have to define if the appraisal is for purchase or refi makes me think there will be different values for each. My personal experience with appraisals I have found to be very frustrating and not so dependable. I think the real estate industry needs a full refresh with removing all the unethical loop holes.
Good stuff Sam. We offered the sellers price and they were paying closing cost costs, pending a VA appraisal. The appraisal came back several thousand dollars lower and a list of fixes needed. We made a new offer at the lower price, accepting the findings. The buyer rejected our offer and wouldn't negotiate. We had already broke our apartment lease, willing to live in a Jack Rabbit Storage than spend another night in our nightmare apartment. We kept looking, but nothing came close to this house. 1 day from moving into our realtor's place in Pungo, the owners called to accept our offer. We moved in the next day, agreeing to rent while we went through the whole process again. Owners took all the light bulbs, even in the stove and refrigerator. At closing, the owners were very hostile, the woman literally sat with her back to the table. A very bizarre 4 months in our life. But we got our house at what we saw a good price. So the system works!
WOW! That's intense! Way to hold your ground, sounds like the seller must have been caught completely off guard to the new price, their response is a big bummer. But you're right, this is an illustration of the system actually doing its job!
@@samsansalone all good now, so stressful at the time. On E-5 pay back then it was major!
What if you don't have the extra over what the house is appraised for? Then you may have no choice but to withdraw from the purchase. No matter you shouldn't try to buy what you can't afford at this time no matter how good your credit rating is
@@Earthlove-bc I don't have the answer for that.
In this market, if you don't have at least 20% above asking price... Just fa get about it lol
Does this apply to homes in California also?
“But it’s very very rare that this happens unless the market is so crazy..”
*2020 has entered the chat* great video though! My market in AZ is ridiculous right now. People are waiving appraisal contingencies altogether 😩
Same in NJ, people are going 10% + over asking. I don't even wanna know how it works if it's appraised less.
You can also add in the contract that the buyer agrees to pay price regardless of what it appraised at. That’s what we did as sellers. We had a bidding war on our house so everyone came in 10 or 20 k above our asking price.
YES! I need to make an edit to the description of the video including this, thank you so much for mentioning it! Very important now, as many markets in the US are very competitive and slanted towards the sellers.
Can you explain this a little more please? So if the contract is 150k but appraisal is 140k, the seller can agree to pay 150k anyways?
@@michellehoffman7158 yes
This is exactly what happened to me yesterday, it is being talked about with my agent and theirs and i am so terrified.
Any update?
What if the financial is conventional loan?
please one question as a seller VA appraiser came in love almost $70k lower of asking price .. how many day do i have to respond back after i receive the appraisal report (that i dont want to continue to sell the house ) and is the contract still on ?
Good video and now I know why people always choose cash buyers haha
Damn appraiser ruining deals
Pay cash then...... I'm an appraiser in Indiana
😂🤣😂
I have one messing up my refi!
@@mark3158274 most ppl don’t have that kind of money.. wtf?
I’m going thru this right now. The home I’m purchasing cake back $47,000 less then what they were selling it for.
Wow! How has the seller responded? Do you know yet?
Sam Sansalone I still haven’t heard anything. I should’ve closed on the 28th of August
Buyers came in and offered 50k over asking price . Their bank appraisal will be in soon . Please guide me here . TIA
It effectively forces you to increase your down payment. Saying you are “paying more” feels a bit misleading since the only thing changing is the amount you are financing. The end price is unchanged from what you originally offered
That’s what I’m saying. Our down payment is essentially just larger.
Yeah but you are literally starting out with negative equity
If I won an offer on a house for a deposit of $12k and it appraised lower than original price, how would that affect my final deposit? Great video btw...
Hey Tony! I'm not sure where you're located in the country, but typically you wouldn't need to adjust your deposit or lose your deposit in this sort of situation. There would be a new negotiation between you and the seller agreeing to a new purchase price. Often the sellers drop the price to the new, appraised price, but it's not a guarantee. Some buyers pay extra to make up the difference, sometimes it's a mutual compromise. But if you guys can't come to the new price agreement, normally you wouldn't lose or have to adjust your deposit, but it all depends on the contract you have in place and the state you live in.
Where does that “extra” money go? Towards your loan amount/principal balance?
In goes in the seller's pocket.
Can there be 2 appraisils, one from the seller before contract & than from the fha afterwards before closing? And who pays for the 2nd fha apprassil?
The only one that will matter is FHA. Lenders only accept their appraiser appraisals.
I'll Tell you what to do. Review the appraisal to see if they did anything stupid or careless, but if it's a decent report and there's really nothing to correct or critique, then RE-Negotiate or Walk Away! :)
I literally bid 35k over asking, and the seller went with a buyer paying 50k over and signed the appraisal waiver taking full responsibility. What is wrong with these people?
Its all about the Benjamin's in other words. I sold my house for 406k when my realtor said he was comfortable at 360k. I live in Oceanview. There was a buyer that really wanted it by the way.
What do you do when the appraised value is $50K less than the asking price? Lost cause? Cannot afford that much in cash.
Unfortunately Sounds like a lost cause if seller is unwilling to negotiate the 50k in differences and you can’t come up with the difference in cash.
I am just learning that loan institutions are black and white when it comes to the appraisal value. They won’t lend you a dollar more than the appraisal value.
@@ginoariel8697 In this market? I heard otherwise…
I put an offer of $300k on a listed price of $290k property.
I am to put a down payment of $200k. Approved loan amount is 100k. Appraisal is underway. What if the appraised price is $280. Will I still have to add another $20k on my already higher down payment?
I am in the process of buying a 3 bedroom condo , the inspection was good just a few minor things , the condo is on sale for 150, 000 I am waiting for the appraisal , I was doing some research that condo could be worth 200,000- 215,000 That would be great for me instant equity . Keeping my fingers crossed , good video thanks
Hi, any updates on your appraisal?
If a house appraises lower than the value of the home the first time it's goings to do the same thing the second time... so the owner need to step up and negotiate with the buyer..makes more sense... it is happens I feel the buyer should get their money back if the owner does not accept the offer. It's not right.
God great insite but I think I'm stuck. Sam. What would you advise in my case. I'm closing on a townhouse on June 30th located at 2449 sw 153 pass. I'm the buyer but I have nobody representing me. The contract was for 380k with appraisal Contingency. This is a gor sale by owner. We don't have the appraisal yet and the inspection came back with $3,139 in repairs needed. I dont know what to do as a 1st time home buyer. Trying to do my research as much as possible. Thanks a lot for your content it really helps.
How did it go?
Get someone to represent you, first home buyer and fsbo... the most important purchase of your life. I hope they're paying closings costs. Im buying right now fsbo, with a pro, helped us with contingencies, procedures, negotiations, paperwork, spir... network connections. fsbo always over values, always wants top $ on comps without paying realtor fees, representation and marketing.. plenty of wiggle room. Best of luck!!
Do you have a Loan Contingency clause/period in VA?
We have one for loan denial and also one for qualifying for financing!
@@samsansalone , hmmm...CA is a little different. We have a Loan Contingency (21 days) and an Appraisal Contingency (17 days). Our Inspection Contingency is also 17 days. So can you write into the contract an appraisal contingency? It almost sounds like you don't need to.
@@samsansalone , hmmm...CA is a little different. We have a Loan Contingency (21 days) and an Appraisal Contingency (17 days). Our Inspection Contingency is also 17 days. So can you write into the contract an appraisal contingency? It almost sounds like you don't need to.
I guess we technically could, I don't see there being a need. We also have shorter inspection contingency time frames (typically 10-14 days, or sometimes less) - though it's negotiable. Both of those other contingencies you mentioned we have here, but just sounds like the loan contingency is structured a little differently. This is actually a topic for one of my past videos!
I'm an appraiser in Indiana very well covered.
Thanks, Mark!
I have a question? We paid for our lot, been waiting on the bank for the loan approval, the appraisal wants more money 💰💰💰💰💰, and it's not a small amount. What can I do as a 1st time home builder. Please Help🥺😭😭😭 I am losing sleep over this.
@@feliciaturner185 The appraiser ?? want more money? That sounds strange.
As an appraiser myself, I agree.
@@mark3158274 sorry Mark not the appraiser. The bank lender call me advise me the house was appraised at a lower amount, she advised my fiance & I we could pay the $40,000 different . I advised her I would like to speak with the appraiser. I was advised by the bank lender she was in contact with the appraiser, I advise her we would like to speak with the appraiser. I feel like we are getting no where. But I pray God shall & will work in our favor.
Is the buyer allowed to hire the FHA appraiser or is this only ordered by the FHA lender?
Great question - the lender actually orders the appraisal, but because it's an FHA mortgage they order the appraisal but they can't choose who the appraiser is. They can't hand-pick, if that makes sense.
You're also forgetting to mention hat with FHA, for example, once it's appraised it is appraised at that value for multiple months, and if the seller gets another FHA offer, then they have to go on that "appraised" value beforehand. So sellers might be more willing to negotiate rather than potentially exclude a large percent of buyers (FHA).
That was specifically mentioned
That was mentioned in the video.
What if the buyer offer to remove the contingency and not negotiate the price if the appraisal came lower. Found out the appraisal came low
Their offer is too good and put them on the top list. After appraisal.. they still want the house but don’t want to stick with the price
All it takes is one overvalued sale to increase the overall local real estate price huh
Just got the appraisal on a home we're looking to purchase and it was approx $18k less than the offer. I'm stressed out right now. Can't even sleep 😞
😱 what part of the country??
I’m awaiting my appraisal, so nervous!!
Why cant you sleep. Thats good! You can negotiate. If it appraised higher, you would have to pay more for it.
Great topic
During the peak about 2 years ago a buyer was willing to pay $225,000 more than the appraisal came in at.
Crazy if true. That's just pure suicide.
I have a question. Who pays for the VA appraisal?
The Buyer does.
Hello, much more reasonable and financially stable Ryan from The Office
If both party don't come to an agreement, buyer will get earnests money back, but who foot the bill for appraisal fee?
That fee is not refundable
Can’t the buyer just use some of the money that he was planning on using for the down payment to pay for the difference?
No it’ll be extra on top of down payment and closing
Lol and now in 2021 everybody is offering above asking price. And even if the appraisals come in lower they don't seem to care
I am trying to buy a house(01/2021) the house is being sold as is. kitchen needs to be remodeled. which will cost around $13,000 to $20,000. but the seller is selling the house as it. which means he will not lower the price.by the way the seller is a real estate agent. and knows his game. what can be done in that case.as a buyer.
Buy they house and save up for a kitchen remodel.
@@blondeonabke2193 Realtor found out that the Sewer pipe and the gas pipe cross each other. which the City has some problems with it. which i guess it will cost a ton to fix it. thats why seller is selling the house "AS IS"
Why are RE agent so casual about buyers paying more than a property's appraised value? Pure and simple, because they get a higher commission, it raises the average property value price point for the region, and impacts future appraisals ... all of which result in inflation, higher taxes and of course higher commissions for agents in the future. A large appraisal gap should be a huge red flag that the listing agent hasn't done their job properly. Anyone falling into the trap of having their agent recommend paying over the appraised value, especially if it is more than 5% different than the asking price, should probably be talking to a lawyer or at the very least the agent's broker . Sounds to me like it's time for appraisals and inspections to become a part of the public record for each property along with the RE agent's interactions. We also need a public tool that does appraisals consistently and not leave it to RE agents and appraisers with questionable loyalties (or ethics).
Interesting perspective! Have you been an agent before? In a typical transaction if a buyer has to offer $5K over a $400,000 asking price house, for example, the difference in commission after fees and taxes is right around $78. $10K would then by about $156. Maybe I'm weird but being forced to have difficult conversations with clients who want a specific house that has multiple offers isn't worth trying to get them to offer higher just to pocket like $100-$150. Why would even the most selfish of agents do that? Also, to your comment about paying over appraisal. Another way to see it is to realize that when interest rates are as low as they are now and prices increasing, for someone who wants to live in a house for a long time they would much rather spend extra with a cheaper rate than possibly the same amount with a higher rate, therefore more interest/higher payment. I would encourage you to plug in a home sales price of $400K into an amortization chart with a 3% interest rate and one at $375K with even just 4%. See what you notice about the difference in total money spent over time. There is a lot here to discuss, but it's clear that maybe you've had a bad experience in the past with either an agent or a home-buying process. If that's the case I hope your next one is much better!
Greedy real estate agents everywhere Negotiate the commission down as low a possible. You have been paying the mortgage and need this money to put down on overpriced house.
My appraisal has allot of errors and he's gave the property a value of 42k instead of the 52k asking price that's a huge difference and he compared it to a getto house that sold for $0 and stated our house has 852 bath"s ugh a joke so not much of this video is to helpful
My 529k offer was accepted. Later, the house appraised for $495k .....this is stressful...the seller is stubborn...so I may potentially lose out on the inspection and appraisal fee which is $1000 so not fair
Can you tell us what happened? Did the seller agreed to lower the price? Or you pay the difference?
@@kismetsih5064 yes, she agreed to sale at appraised value...but refused to do the termite clearance. I let it go and bought the house. Now that I'm here the electrical, plumbing, termite situation has to be done...this has been expensive , but I'm thankful to be a homeowner now and that I save 29k on the purchase price
@@successfulMillennial Did you do conventional or FHA??
@@olafg19 conventional with 3% down
@@successfulMillennial did seller end up negotiating price?
Great video
+Bubba Wayne thanks a lot! Appreciate the feedback!
yes in a hot market why would the lender not fork up that extra 10k?? wahahaha... they already know the buyer gonna be a house poor anyway..... I guess Im walking away.. we'll see
2021 wave all appraisals and pay cash. The middle and lower class will continue to be dismantled into poverty
Why would any true business person even use the words “worth it”. There is market value that is set by the market and there is appraised value that is set by a guy in an S-10 pick up that is paid $200 for an appraisal that the bank charges $500 for ..who may never have even been in the neighborhood in his whole life. You tell me what an appraiser does and we’ll both know. Appraisers only see the houses they appraise… high end work when you’re awake realtors see all of the houses available.
#2 is you are paying $50 for a $30 hat! The Appraisal isn’t going to change no matter what price above the appraisal price the Seller resales the house again. Man - no. We had a deal...the Sellers realtor said “if the appraisal comes in below the sell price the seller will honor that.” Uh...yeah...whatever. The Realtors can pay some of the difference too and then the seller make up what’s left....did you mention that?
Sound like a bunch of scam
Very good info Sam!
Thanks, Alfredo!