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So, I am in the home buying process, and everything was going ok - got approved for the FHA loan and all seemed well...then the appraisal came back. The appraisal has the house at 15K under the price we are paying for the house. The bank would like us to come up with 15K difference, but we may be immediately underwater with it so we are leery. Therefore, went back to my buyers agent to ask sellers to reduce price. Our buyers agent has not done a lot for us, so I don't have faith...I told him Zillow had the value lower by over 10K when bidding on the house, but he was like "don't listen to that website". The sellers were not willing to negoitate by more than $3900, so I am not sure they are going to budge even more, especially 15K more. However, they did start moving out to another home (they are older and retiring to another state). Not sure how this one is going to turn out, but I'll be damned if I pay a lot more than the house is worth...this is so stressful :-(
I would not pay anything over appraisal and have to come to closing with cash in this economy. Reality is most wouldn't so if the sellers don't accept appraisal from you..they will likely still have it this time next year. I know you like the house and have $ invested but I personally would walk if they don't accept $15k less. I feel for you..heck..I feel for the sellers. Not a good situation.
I would not pay anything over appraisal and have to come to closing with cash in this economy. Reality is most wouldn't so if the sellers don't accept appraisal from you..they will likely still have it this time next year. I know you like the house and have $ invested but I personally would walk if they don't accept $15k less. I feel for you..heck..I feel for the sellers. Not a good situation.
It is a horrible situation for both of us - I do not want to pay 15K more than appraisal just to lose that money immediately in equity. I'd be better off taking that 15K to a casino right now. My buyers agent told me that appraisal sticks with the house for 6 months, so if they prefer to let it sit and are really stubborn about what its worth, we have to walk. I guess I didn't waste tons of money in house, just the appraisal and inspection at this point, but it is more of an emotional drain then anything. And of course, begging out landlord to let us stay (we already gave notice) or trying to get another rental ASAP, because we sure as heck won't find a house to buy in our short timeframe to find someplace to live (we have to be out by Jan 15th). Thank you for your empathy for the situation, I appreciate it!
Why have you (or either of the agents) not asked for an appraisal review? If they are confident about the selling price, they should submit their own comparable sales to the lender to submit to the appraiser for a review. MANY times, the appraisers are not familiar with the immediate areas. I currently have one that came in $9k low, and that's obsurd! There are 9 sales in the community that sold significantly higher than our sales price (like $20-30k higher), and they were completely ignored. Through an appraisal review, they're getting looked at.
Why have you (or either of the agents) not asked for an appraisal review? If they are confident about the selling price, they should submit their own comparable sales to the lender to submit to the appraiser for a review. MANY times, the appraisers are not familiar with the immediate areas. I currently have one that came in $9k low, and that's obsurd! There are 9 sales in the community that sold significantly higher than our sales price (like $20-30k higher), and they were completely ignored. Through an appraisal review, they're getting looked at.
We have, although the process of getting the review is too slow for my blood (we only have a week before commitment date). I've also been doing my own comps, and I have come up with different results then my buyers agent. I'm a bit leary to say that the appraiser is far off on this one, seems values have plummeting in this 1-2 mile radius area in the last 6 months, and it probably dragged down overall value. My buyers agent was taking homes in ALL of the school district, which I disagree with his philosophy because one housing development or "patch" can vary from the next. Some of these houses were actually over 10 mile away - so I need to see what they are using for comparison value.
How are you running your own comps? Does your state release sales prices? In Texas, we're a non-disclosure state so sites like Zillow don't actually have sales data, only tax assessments. You can't rely on a computer generated number as that computer has never been in the property. Appraisals are very subjective and some give higher/lower values for different features and upgrades, or lack there of.
You cannot go 10 miles out unless there is absolutely nothing comparable to your property within a 2 mile radius. Custom homes don't compare to tract homes and 30 year old homes don't compare to 10 year old homes. Like for like, is what the appraiser should be looking for.
How are you running your own comps? Does your state release sales prices? In Texas, we're a non-disclosure state so sites like Zillow don't actually have sales data, only tax assessments. You can't rely on a computer generated number as that computer has never been in the property. Appraisals are very subjective and some give higher/lower values for different features and upgrades, or lack there of.
You cannot go 10 miles out unless there is absolutely nothing comparable to your property within a 2 mile radius. Custom homes don't compare to tract homes and 30 year old homes don't compare to 10 year old homes. Like for like, is what the appraiser should be looking for.
I'm in PA - in PA, this information is public information (i.e. sales prices as well as tax information). Not one house in that neighborhood sold for as much as we are bidding on this house. Granted, there is variation as you stated (different age, condition of home, different upgrades, etc.), and maybe a bunch of short sales hit that market in last year or two and affected prices???
I think the appraiser is doing you favor -- you'd be NUTS to own the most expensive property in the area!
Given the general slow down that always happens when it gets cold AND the fact that Holidays are upon us AND the fact the economic picture remains as cloudy as ever I would NOT RECOMMEND going through with deal unless the seller cuts his price by the at least $10-12,000. If they see the same things that I have outlined they might realize that they are going to be sitting on this place for at LEAST six months...
I also would NOT discount the possibility of making offers on some of your "runner up" houses at a lower than asking price if the data from this appraisal makes you rethink their value. Believe me, the motivated sellers that still have active listings around the holidays will almost certainly be willing to look at any offer that is supported by reasonable comps. The appraiser seems to have used solid comps -- now if the home you bid really is the "gem of the neighborhood" maybe you don't really want to live in this part of town. If the kind of houses you prefer are ten miles away that is where you should have focused your search...
Quote:
Originally Posted by bluemonday
I'm in PA - in PA, this information is public information (i.e. sales prices as well as tax information). Not one house in that neighborhood sold for as much as we are bidding on this house. Granted, there is variation as you stated (different age, condition of home, different upgrades, etc.), and maybe a bunch of short sales hit that market in last year or two and affected prices???
I think the appraiser is doing you favor -- you'd be NUTS to own the most expensive property in the area!
Given the general slow down that always happens when it gets cold AND the fact that Holidays are upon us AND the fact the economic picture remains as cloudy as ever I would NOT RECOMMEND going through with deal unless the seller cuts his price by the at least $10-12,000. If they see the same things that I have outlined they might realize that they are going to be sitting on this place for at LEAST six months...
I also would NOT discount the possibility of making offers on some of your "runner up" houses at a lower than asking price if the data from this appraisal makes you rethink their value. Believe me, the motivated sellers that still have active listings around the holidays will almost certainly be willing to look at any offer that is supported by reasonable comps. The appraiser seems to have used solid comps -- now if the home you bid really is the "gem of the neighborhood" maybe you don't really want to live in this part of town. If the kind of houses you prefer are ten miles away that is where you should have focused your search...
^^^This I agree with 100%. I know it is emotionally draining. You know it's not a wise financial decision to do it. So I would push the sellers..from a sellers standpoint..being this close I would do it. I would NOT want to lose a buyer in this economy over $11k that I know I can't get from someone else due to appraisal. Knowing they have moved out makes me think you've got an advantage. Putting it back on the market while paying on another mortgage for who knows how long could eat up that $11k in no time. Stand firm and be prepared to walk.
If not a single other house has sold for the price you're at, then the appraisal is probably correct. Granted, there always has to be the highest in a neighborhood, but I don't recommend buying the highest... unless you absolutely love the house and it's everything you want with no compromising.
As others have said, with them already moving out, they're probably negotiable, and worse case you should be able to at least get them to split the difference if you really must have this house and they won't lower it completely.
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