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Old 05-23-2008, 10:36 AM
 
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The appraisal for the house I want to buy turns out a couple of thousand lower than the purchase price. Is this normal?

It is worth negotiating with the seller to match the appraisal price? Is it too late since attorney review and inspection are already completed? Thanks a lot!
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Old 05-23-2008, 11:00 AM
 
Location: Savannah GA/Lk Hopatcong NJ
13,112 posts, read 25,308,576 times
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Good question ..hope someone answers
My kids just asked me the same question..what if??

I don't know why you have to pay for a home inspection BEFORE it's appraised..is there some logic to that?
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Old 05-23-2008, 11:04 AM
 
Location: NJ
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well, it can be an issue with the mortgage company. if you're counting on say $100K from your lender based upon the purchase price, they may come back and only give you $95 and you'd have to come up with the rest. lower appraisals have killed deals in the past. if you can eat the additional amount or have a large downpayment, this may not be an issue.

i'll let someone else explain it better though.
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Old 05-23-2008, 11:07 AM
 
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I wouldn't say it's "normal", but it happens. Especially in this market when lenders are very cautious about lending and want to make sure that the property is not overpriced.

Homeowners DEFINITELY will negotiate with you on this one, because they will realize that 99% of the potential buyers out there will need financing to purchase their house, and banks won't finance a house if the selling price is higher than its appraised value.

I have heard of sellers requesting a second opinion from a different appraiser (at their expense, I would insist) and depending how that turns out (i.e., depending on whether your lender will accept the second appraisal, or will do some sort of averaging, etc.) you can negotiate a lower price.
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Old 05-23-2008, 11:12 AM
 
Location: Savannah GA/Lk Hopatcong NJ
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Quote:
Originally Posted by Lusitan View Post
I wouldn't say it's "normal", but it happens. Especially in this market when lenders are very cautious about lending and want to make sure that the property is not overpriced.

Homeowners DEFINITELY will negotiate with you on this one, because they will realize that 99% of the potential buyers out there will need financing to purchase their house, and banks won't finance a house if the selling price is higher than its appraised value.

I have heard of sellers requesting a second opinion from a different appraiser (at their expense, I would insist) and depending how that turns out (i.e., depending on whether your lender will accept the second appraisal, or will do some sort of averaging, etc.) you can negotiate a lower price.
So what's involved in the appraisal...how do they come up with the amount
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Old 05-23-2008, 11:37 AM
 
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Originally Posted by njkate View Post
So what's involved in the appraisal...how do they come up with the amount
Depends on what the lender requires, I believe. In some cases they can do an appraisal simply based on the comps of other real estate values in the area. I think that's more common in a hot real estate market where values are rising and lenders are less concerned.

When the valuation appears to be a close case, or if the neighborhood is a difficult one to apply that method (e.g. many different lot/house sizes in the same immediate neighborhood instead of a track of nearly identical houses), or when lenders are more cautious (as in this market) they will actually visit the property and do a visual inspection. If an outside-only inspection can satisfy the lender that the house is worth the contract price, I think they stop there; otherwise they will actually do a more thorough inside/outside appraisal.

Just my understanding based on past real estate transactions.
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Old 05-23-2008, 11:39 AM
 
Location: Here but I spend time There.
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from my own personal experience: we made an offer on a home, the appraisal came back 25k less than what we offered, we (buyer & seller) split the difference 50/50.
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Old 05-23-2008, 11:49 AM
 
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Originally Posted by Alex07860 View Post
from my own personal experience: we made an offer on a home, the appraisal came back 25k less than what we offered, we (buyer & seller) split the difference 50/50.
Interesting - the lender had no problem with that? What type of financing were you doing, if you don't mind sharing? (e.g. traditional 20% downpayment or more/less?)
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Old 05-23-2008, 11:50 AM
 
Location: Atlantic Highlands NJ/Ponte Vedra FL/NYC
2,689 posts, read 3,129,233 times
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Quote:
Originally Posted by td2456 View Post
The appraisal for the house I want to buy turns out a couple of thousand lower than the purchase price. Is this normal?

It is worth negotiating with the seller to match the appraisal price? Is it too late since attorney review and inspection are already completed? Thanks a lot!
banks will sometimes not finance a home that doesn't appraise for the selling price, make sure your financing is in order before proceeding
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Old 05-23-2008, 11:59 AM
 
Location: Here but I spend time There.
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Quote:
Originally Posted by Lusitan View Post
Interesting - the lender had no problem with that? What type of financing were you doing, if you don't mind sharing? (e.g. traditional 20% downpayment or more/less?)
We were doing more than 20%, but the lender did not have to do anything, since the seller agreed to split the difference 50/50. So out of the 25k less appraisal, the seller ended up lowering his price by $12.5k and I had to add another $12.5k out of pocket.
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