Advice needed: Appraised house value lower than sale price (appraisal, to eat)

[cata]

What happens if you up the offer price because you need money for closing. So your seller gets what he wants and you get your closing. The appraisal comes $2,000 lower. Is it fair to ask the seller to drop the price and maintain what you have requested for subsidy?

[sbelvedere]

Originally Posted by Snikt

The market isn't picking up that much. The area I'm buying in which I think is average or above average of the metro area increased 1.7% year over year.

I would walk away unless you really want to pay the extra 20k ( or can even? ). There are plenty of places on the market

I agree on walking. Especially at $600k in the suburbs of Denver. Under $300k are going super fast, $300-400k are also pretty fast, but the expensive stuff that I've seen, especially the ones that are the most expensive ones in the neighborhood, are languishing and tend to drop in price, especially as the end of summer nears. The demand for homes starts to drop considerably on the high end like these kinds of numbers, especially in the suburbs.

[ChrisFromChicago]

Originally Posted by Belle_w

Thank you all so much. We do have the right to terminate based on our contract and will get our earnest money back. Our contract does not have the clause that the seller has to come down however.

The Appraisal objection deadline is next Wednesday. We shared the appraisal report with the seller as well. First attempt was to lower the price down to appraised value. Seller rejected. Second attempt to meet us halfway or we will walk. Seller rejected. Latest response from seller's realtor is that they are set solid and will not negotiate.

The ball is indeed in our court. Appraisal is 3% below agreed upon price. Bank told me also that's it's up to us. We do like this house, but don't want to overpay.

Charlie M, you mentioned that low appraisals are common these days. Is it because the market is picking up, and comps are still based on previous sluggish data? One independent appraisal (friend) did tell us this is a hard appraisal because there are not enough comps in that area. Our realtor did tell us also that not many people sell in Homestead comparatively.

Kill this thing. . . . seriously. If you can't get financing the deal falls through. Unless you want to find another mortgage company but. . if my appraisal came 20k over I would have a REAL hard time paying one cent over appraisal

there are more homes out there. .

FYI: I just bought a home, and the appraisal came slightly over/about the same

I consider a low appraisal a red flag

[davebarnes]

Originally Posted by ChrisFromChicago

Kill this thing. . . . seriously.
I consider a low appraisal a red flag

Given that the OP's post is 9 months old, I think that an appraisal back then is/was a red flag.
Given today's crazy (very low inventory) market in greater Denver, I think that appraisals will be low.

[BacktoCO]

Hmm...I wonder what ended up happening. We were looking for a home in that same area and the prices have gone higher in even the short amount of time we have been looking (since December). I am kind of worried that we overpaid for the house we did just contract on but we had to beat another buyer's offer to get the home. I really wanted the house and we plan to stay there until our kids are raised. It ended up appraising just fine without any issues but from sales data from just 6 months ago I don't think it would have appraised. There were not a lot of comps in this particular subdivision. We were worried about whether or not it would appraise okay. If it hadn't we were going to request the appraised value as the new purchase price or walk. I could see how a grumpy appraiser could be a deal killer in this type of market where things are changing so quickly. Not only is inventory low, but the inventory of "good" houses is even lower.

What is really surprising is how fast all of the prices seem to be going up in just the past 4 months, even in the further out suburban areas. It seems like there are two markets--the bad condition houses that are overpriced in nicer neighborhoods that sit forever (Cherry Creek Vista, Homestead Farms area comes to mind) and then the good condition houses that are priced correctly or maybe just slightly high that sell faster than you can count. We were interested in two houses in Greenwood Village--gone before we could even log on to book a flight!!

[SkyDog77]

Originally Posted by cata

What happens if you up the offer price because you need money for closing. So your seller gets what he wants and you get your closing. The appraisal comes $2,000 lower. Is it fair to ask the seller to drop the price and maintain what you have requested for subsidy?

I'm not sure I understand what you are asking. "Up the offer price because you need money for closing" is not very clear to me.

[davebarnes]

Originally Posted by cata

What happens if you up the offer price because you need money for closing. So your seller gets what he wants and you get your closing. The appraisal comes $2,000 lower. Is it fair to ask the seller to drop the price and maintain what you have requested for subsidy?

So, you raised your offer above market value (i.e., the appraised value) so you get more "seller assist" and now you want the seller to eat it.
Whatever happened to buyers putting 20% down and paying their own closing costs?
I hope the seller tells you to pound sand.

[SkyDog77]

Originally Posted by davebarnes

So, you raised your offer above market value (i.e., the appraised value) so you get more "seller assist" and now you want the seller to eat it.
Whatever happened to buyers putting 20% down and paying their own closing costs?
I hope the seller tells you to pound sand.

How does this work? Not familiar with the structure of purchase.

[davebarnes]

Originally Posted by SkyDog77

How does this work? Not familiar with the structure of purchase.

http://www.city-data.com/forum/real-...e-explain.html

[SkyDog77]

Originally Posted by davebarnes

http://www.city-data.com/forum/real-...e-explain.html

Ah. I had just never heard to it referred to in that name.

Not something that most sellers need to do in this market in Denver.