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Old 03-28-2015, 04:48 AM
 
Location: Summit, NJ
21 posts, read 54,685 times
Reputation: 21

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Hi all,

Just wondering if anybody out there is familiar with the market in Maplewood, NJ. Very hot market right now. We are under contract on a home and awaiting the home's appraisal. We were one of ten offers, three days after the property was listed. So yeah, very high demand in this town.

We did end up paying well over ask, of course, and I am now a bit worried about the home appraising. We were firm about keeping our appraisal contingency in the contract so we are "protected", but I am still just wondering if anybody has recent experience with buying or selling a home in this market and what the typical situation is with appraisals there now. The home is a good size, in a fantastic location, etc. But I am concerned that the comps in the area have not been able to keep up with the demand there. Most homes go under contract within 10 days there.

Thanks for any insight!
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Old 03-28-2015, 08:18 AM
 
Location: MID ATLANTIC
7,598 posts, read 17,614,249 times
Reputation: 8078
Never expect an appraisal to be your home inspection or set your sales price. I once had an agent (actually, she had her broker's license) offer 20K over list, just knowing the appraisal would reign in the value. Because the market was so hot, they (same transaction) also did not ask for repairs, again, just knowing the appraisal would require the repairs.

You guessed correctly if you guessed the value came in at offer and "as-is." First there was shock, then anger about the appraiser's work. She then proceeded to tell me their strategy. I told her to give me a letter spelling out her complaints. I've never seen someone sputter so much, but that was my deciding factor I was done working with this particular agent. (She was lucky the buyers didn't file a formal complaint, but they barely spoke English).

If you make an offer, be prepared to pay it. Just because it comes in low, does not mean the seller will reduce his price. He could go back on the market, get an offer at the same price as your offer, just with another lender, and it would appraise. Figure out quick what you are willing to do and exactly how much you are willing to pay. The more you try to play the game, the harder you can get bit.
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Old 03-30-2015, 05:34 PM
 
Location: South Texas
478 posts, read 827,225 times
Reputation: 593
Appraisers to not appraise a property's market value based upon the sales contract sale price.

No appraiser in his/her right mind would ever do that. First, Fannie Mae specifically prohibits that practice. Secondly, a new FM appraisal review technology (Collateral Underwriter) specifically looks for over-valued appraisals and kicks out a warning message to the lender for possible additional action.

Regardless of the above, the real issue, as I see it, is that your agent apparently didn't warn you that the appraisal is not intended to "save" you. You were voluntarily bidding above a reasonable market value and should have been prepared to bring cash to the table to pay the difference between market value (per the appraisal) and the final accepted offer. I certainly hope your agent told you that.

But maybe the appraisal contingency can save you after all. I have been contacted in the past by a former buyer who thanked my partner and me for saving him and his family many thousands of dollars when he enthusiastically got involved in a bidding war on a property and "won" the final bid. The house didn't appraise to the contracted sales price so he exercised the "subject to appraisal" clause. After he'd had a few days to cool off after the "appraisal blew up the deal" (love that phrase ), he realized that he'd become emotionally involved and was bidding recklessly to win the bidding, regardless of the counsel of both his agent and his common sense.

I hope things do turn out well for you in your new home search.
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