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I wouldn't do it either. This happened to us about 10 years ago before we bought our current house. It was a condo, FSBO and had everything we wanted. We had been looking for a while and there was so much crap on the market that when we saw this place we were sold right away. So we agreed to a full price offer ($187K). Comps were lower, but this unit had had a few upgrades so we weren't too sure. Bank appraisal came in at $5,000 less than offer (so $182K) and at the time we not only didn't have the extra money (we had already agreed to pay half of our agents commission), but as much as we liked the place we couldn't justify paying more when the bank was telling us the place wasn't worth it. Seller refused to negotiate and we walked away.
It ended up working out poorly for the seller. A few months later they ended up listing with an agent (so paying commission) and dropping their price to the price our bank had said it was worth ($182K). They eventually sold for $8K less than that asking price ($174K).
Dont do it. Its too much money to be out. We put in an offer on a house that everyone loved ; it was a great house, great view but high price. So we went in with what we were happy with, they refused it, we upped it by 15,000 and they came down 15,000 but it was not enough. The only comp that I could use was one that sold for $55,000 less.
We walked and found something smaller, not a wow house but something we are comfortable with.
It's fine to overpay a little if you are inlove with a house, can afford it, and play to stay for a long time (hey, the market will go up eventually).
Just go to some generic online calculators and see how much $15K will get you in retirement and see if that's worth the extra you are paying for the house. It maybe, I don't know.
Generally speaking, we are not living in a time where buyers can overpay just because they like a house, unless you are a cash buyer. Not many of those out there.
The bottom line is to realize that the bank's appraisal is really what's in play here and what is setting the market. I think it's so stupid that the appraisal has to come AFTER you've agreed to a price with the seller. Realtors are not appraisers and a CMA is not an appraisal. Why dally with all these other numbers when the appraiser's is the only one that matters?
We once had a seller who had the audacity to suggest that we take out a second mortgage to make up the shortfall between the selling price and what the appraisal came in at... to the tune of $25,000. We laughed a lot at that one. They were absolutely offended that anyone would think their house was worth so little. It's funny because I recall that our initial offer was almost exactly what the appraised value came in at... But being young and inexperienced, we allowed the price to get negotiated up.
That was over three years ago and the house still sits unsold.
Last edited by markintosh; 04-24-2012 at 04:11 PM..
Reason: spelling
Oh heck no we aren't going to spend an extra $15k. As I said, I don't want to be penniless to make up the difference. I can afford 5k ... but not 15k. We love the house but we realize there's plenty of fish in the sea and the local market is "waking up" so there'll be more coming online probably in the summer.
Anyway, still no word. I've heard that typically appraisal firms react badly to anyone daring say they're perhaps incorrect, so we aren't holding our breath.
I think it's so stupid that the appraisal has to come AFTER you've agreed to a price with the seller. Realtors are not appraisers and a CMA is not an appraisal. Why dally with all these other numbers when the appraiser's is the only one that matters?
Nothing prevents you from having your own appraisal done on a property you are interested in.
Anyway, still no word. I've heard that typically appraisal firms react badly to anyone daring say they're perhaps incorrect, so we aren't holding our breath.
Not any professional appraisal firm, provided the communication was conducted in a pleasant, professional manner.
You have to understand that many appraisers are very busy, and when any request comes in, it goes into the queue. We can't just drop our other clients' work.
I had a similar problem recently, the Seller rejects the appraisal/my request to lower the price and asked me to get another appraisal, however I rejected it and requested to cancel the contract, the Seller back off and lowered the price 5K. It is always about if you really like the house or not.
Nope. The appraiser was being generous actually. Another unit, same floor plan, same upgrades, same area and bed and bath and garage sold for 30k less than what the appraiser said our unit was worth.
This doesn't necessary mean anything. There are people that sell houses to relatives to $100, just enough for the paperwork to transfer ownership, but you can hardly point to this and say all houses in this area are now worth $100. There may have been other factors why the other unit sold for 30k less, and it doesn't have to have anything to do with appraised value.
So if the appraisals are in the system for 6 months can we or our realtor access that information to see what they appraised at a few months ago. Secondly since it was appraised a few months ago could we not just use that information for our bank, if they would accept it?
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