Low Appraised Value - ?? (property tax, financing, property, bank)
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New home buyer - Offer price of 304 K on property and appraisal came back @ 290K with closing in 11 days. There are only 2 Exact layout for Comps - one of them as sold at 295K and another at 285K (Cash Transaction without MLS listing). All other comps are smaller layout without basement and adjusted to the subject resulting in 290'ish value.
This was done by Bank (lender) Appraiser and seller has come down to revise offer price at 300K. I was planning to do 15% down payment and do not have enough $ room to pay 10K difference out of my pocket. Paying higher than the Appraised value is also not common in our market.
Given the scenario - I am not sure if i should overpay (thinking around 295 - Not sure will the seller accept) for the property based on appraisal or since lender is a major bank the appraised value has come really low. Further when a property has sold at 295K before a month why couldn't the appraiser consider it as a Strong Comp when compared to other Full Cash Transaction?
Personally, unless I loved loved loved that house AND there was a serious shortage of housing, I'd tell the buyer to lower it to the appraised value or I would be walking away.
If I just had to have that house, I'd insist on $295k. But you've stated in other posts that this seller has been "difficult " which would also encourage me to walk.
And if you start looking for another house, based on your other thread, I'd dump the current mortgage broker and find a better one.
You could explore doing an 80/10/10. Get a 1st trust of 80% of APPRAISED value, 10% 2nd trust, then you put 10%+10K down.
As JKGourmet said, evaluate how much you really want this home. it sounds like the appraiser was dead-on. 3% is likely around one year's appreciation. It sounds like your seller is a piece of work. Does he have buyers lining up everywhere? Other buyers, willing to pay over appraised value? Because it sounds like any other appraisal will come in just the same, low. There aren't too many 1st time buyers willing or have the ability to pay 10K over list. So think this over carefully, your seller will repeat this situation with another buyer.
new home buyer - offer price of 304 k on property and appraisal came back @ 290k with closing in 11 days. There are only 2 exact layout for comps - one of them as sold at 295k and another at 285k (cash transaction without mls listing). All other comps are smaller layout without basement and adjusted to the subject resulting in 290'ish value.
This was done by bank (lender) appraiser and seller has come down to revise offer price at 300k. I was planning to do 15% down payment and do not have enough $ room to pay 10k difference out of my pocket. Paying higher than the appraised value is also not common in our market.
Given the scenario - i am not sure if i should overpay (thinking around 295 - not sure will the seller accept) for the property based on appraisal or since lender is a major bank the appraised value has come really low. Further when a property has sold at 295k before a month why couldn't the appraiser consider it as a strong comp when compared to other full cash transaction?
I agree. OP, don't over pay. The longer term implications are that your property taxes will get set too high and you'll need to go through the appeal process to lower them. It's better to either nip this problem in the bud right now or walk away.
Appraisal isn't an exact science, but it does seem like your offer was over paying. Even assuming the appraised value should have been 295K, why did you offer 9K more than that? But it sounds like they put the value right in the middle of the two recent sales, which seems like a reasonable number. Why do YOU think the house is worth more than that, besides the seller putting a higher number on it?
You can also ask for a new appraisal if it's not FHA. With the amount of down payment you mentioned, it sounds like you're going conventional. Paying $450 for a new appraisal is a lot less than paying $10k cash difference...
I never understood the logic of a buyer wanting to argue the appraisal up. I would take it as good news that the appraisal came in lower, giving you a very strong argument for reducing the price to the appraisal value.
Assuming that it's ok from a legal/contractual perspective, all you have to do is sit there and say that an independent expert valued the house at X so you're not going to pay more than X and even if you wanted to, it will create financing issues so it's X or nothing.
The seller can then decide if they want to walk away and risk another appraiser coming up with the same answer.
As always, you need to be able to walk away.
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