At Chicago Agent magazine’s Who’s Who party, we asked agents in attendance how they would handle an appraisal that came in below a home’s contract price.
At Chicago Agent magazine’s Who’s Who party, we asked agents in attendance how they would handle an appraisal that came in below a home’s contract price.
What if the appraisal comes in under contract because, simply, the market doesn’t support the contract price. Why is is assumed the appraiser is incompetent?
Depends on the facts. These days, we might get an appraiser from Chicago because the bank assigns an appraiser to avoid ‘hanky panky’ that took place in the 2005-7 era.
Problem is that appraiser does NOT know the market in the suburbs and vice versa.
So if the listing agent came up with a listing price – not too high to avoid the home sitting there, and the buyer agent comes in with an offer that they discussed with the buyers and they feel it is fair based on the comps, why you have is the bank is unwilling to stretch their neck any and they come up with a lower price almost all the time.
Depending on how far we are from the contracted price we sometimes contact the other agent to see if we can bring the buyer and seller together with a compromise at the appraised price. Another option is to either pay for another appraisal or switch lenders and start over. It’s very case by case.
Have occasionally found it useful in the past to actually get another appraisal. Once even had a total of three! In the end, the bank took the average of the three and we then comped out fine…………
As an appraiser and a broker I understand the pain at both ends. Sometimes the best comp is the pending sale down the street that may have sold at a good price but the listing agent won’t release the pending price so it can be used in my appraisal. I understand the concern about our obligations of confidentiality but getting permission from your client to release info to an appraiser might help the next guy.
On the other hand, several times I get calls from appraisers on our sales and I find out that they dont have an MLS ID. If you want to challenge an appraisal, I would start there. The last two low ones we had were by appraisers who did not belong to the MLS, although they clearly had access to the system through a buddy. They should pay their share just as we do but it is a good case for telling the bank the person might be incompetent. Ask for their ID when they call to set up the appointment.