Advice needed: Appraised house value lower than sale price (Denver: mortgage, houses)

[Snikt]

Originally Posted by Charlie M.

Pretty normal for appraisals to come in low these days. It gives you a little power to negotiate a better deal or walk away if you choose. I would think the seller would work with you on the price.

I'm closing on a condo next Friday, my appraisal came in about 5% higher than I contracted for

[Snikt]

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.

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

[davebarnes]

Originally Posted by Belle_w

low appraisals are common these days. Is it because the market is picking up, and comps are still based on previous sluggish data?

By definition, appraisals are always a lagging indicator of value. They are based on recent, past sales.
In a steady market, this does not matter.
In a market that is moving down or up, this matters.
It especially matters when it is just past that point in time when the first derivative of the price curve is zero.
It especially matters when appraisers got yelled at lot for "too high valuations" during the boom years. They are biased on the downward side now.

How about another appraisal with better comps? - More recent sales. Stay in the neighborhood.
How about contesting the validity of the current appraisal? - A tiny change in an assumption or measurement could make the difference. Where does the appraiser live? Are they really familiar with this neighborhood.

7141 S Newport Ct, Centennial, CO is the only house in homestead that has sold for over $600K in the last 90 days.
And, 7039 E Hinsdale Pl, Centennial, CO is the one more in the last 180 days.
Tiny sample. This is bad as the appraiser will start to stray (price and geography).

[2bindenver]

Either home prices or housing starts will surge, economist predicts

A shortage of homes available for sale could trigger either a sharp rise in U.S. home prices or a surge in new construction next year, predicted one of the country's leading housing economists in Denver on Friday.

Either home prices or housing starts will surge, economist predicts - The Denver Post

[davebarnes]

Originally Posted by 2bindenver

Either home prices or housing starts will surge, economist predicts

1. "predicted Lawrence Yun, chief economist of the National Association of Realtors."
Yun is not an "economist". He is a shill for the industry.

2. Yun is talking about the "US market" which does not exist. There are only local markets. (Well, except for "motor homes".)

3. This sounds way more likely to me: "About 31.4 percent of U.S. homes with mortgages on them remain underwater...leading him to support a "long, flat bottom."...calling for a stair-step recovery with spikes in activity followed by plateaus. As prices rise, more sellers can enter the market, and buyers become less hesitant to purchase."

4. And, let's not forget stagnating income. You cannot buy without income.

[Belle_w]

Wow, valuable information all. Davebarnes, we ordered an independent appraisal this afternoon as suggested by our realtor. Thanks for the confirmation. We will have the report next Wednesday. Will see how it comes out. FYI, if anyone else need an independent appraisal done, the cost is $375 (for us)

We have been looking for 2+ months now and the houses we would consider are in the $500K range, but would need some upgrades. Move in ready with nice upgrades are usually in the upper sixes or higher.

Anyway, will keep everybody posted on progress and hope that our experience and outcome will help others in similar situation. This forum is GREAT!!!

[davebarnes]

Originally Posted by Belle_w

...we ordered an independent appraisal this afternoon as suggested by our realtor.... the cost is $375 (for us)

You are about to spend $600K and you even bother to mention the $375 (no K).

We spent $350 for an appraisal on a condo ( 340 S Lafayette St # 402, Denver, CO 80209 - Zillow ) we did not even make an offer on. It was worth every dollar.

On the other hand, we did not have an appraisal done for the house ( http://3968vrain.com/ ) we finally purchased as we paid cash.
And, then after moving in, we decided we wanted (not, needed) some money for landscaping and we had an appraisal done for a HELOC. It came in at $475K and we paid $482K. Appraisers are "chicken-sh.i.t weenies" because they have been beat up so much.

[Mike from back east]

Originally Posted by 2bindenver

Either home prices or housing starts will surge, economist predicts

A shortage of homes available for sale could trigger either a sharp rise in U.S. home prices or a surge in new construction next year, predicted one of the country's leading housing economists in Denver on Friday.

Either home prices or housing starts will surge, economist predicts - The Denver Post

A pal nearby just sold his home in 3 weeks, at asking price of $429k, vice 2006 price paid of $474k.

FWIW: Scuttlebutt here in COLO SPGS is that 90% of home are selling at/near listing price.

Saw two moving vans in the neighborhood today, one inbound, one outbound.

[Willy702]

In the 600k range a lot of sellers are probably counting on the fact buyers are going to have some cash and many are going to roll equity from prior sales into the new place so the appraisal won't matter. If you come up 20k short on a 200k house then obviously the chances of the buyer coming in with 10% more equity is low.

I doubt you are paying too much for your house, just as mentioned earlier there is a real lack of volume in the above 500k range which seems to be coming to a relative end. At current rates there are a LOT of potential buyers. Many homeowners who 10 years ago qualified for 300k could easily qualify for 500k now as long as they have gained or saved up the equity difference.

[ChrisFromChicago]

Why not try a second appraisal (if required, an appraisal from a second mortgage broker). If it too came in under, I would lower/walk. . .the buyer would be an idiot not to realize every buyer might have the problem.


I too recently had a house appraised for a loan, the appraisal came in over the agreed to price