Back in the heyday of real estate when homes in Davis,California were being sold with multiple offers and in a few cases, sight unseen, there was never any issues with appraisals, as a matter-of-fact, if appraisers did not justify the values, many lenders refused to use their services in the future. Now that the housing market has changed, so have appraisers opinions.
What to do when the appraisal on your Dream Home comes in below the price of the offer the seller accepted, in some cases as much as 10-20% difference. If raising the cash amount yourself to purchase the home is not an option. You’re not the only buyer in Davis,California who has hit the low appraisal snag. This past June and July, sixteen percent of real estate pros reported a cancellation in a sale, mostly due to low appraisals.
You can fight back, you have options and chances are you can make the deal work without increasing your down payment. Appraisals are largely based on prices recently paid for comparable local properties. Over the last decade, finding “comps” that accurately reflect values has been a challenge, not just for homes in Davis but throughout the United States. Here are four steps you can take to save your Dream Home.
Get the seller to lower the price: This is the easiest solution especially if your appraisal comes in less than 10% of the contract price. Demand is soft and time is money. Your seller, particularly, if they are selling to buy another home could be in a real bind if they are forced to back out and put their home back on the market.
Ask the seller to carry a second mortgage for the difference: This solution does not cost the seller anything but the buyer does incur more debt. If the buyer really wants the home but cannot come up with the cash, then making payments or a lump sum payment at a later date to the seller can keep the escrow intact.
Dispute the appraisal: Is the contract sales price a fair assessment of the property value. Have your Realtor prepare a Market Analysis and use values the appraiser might have overlooked. Disputing the value may sound a little aggressive, but you might be the victim of a poorly prepared appraisal.
Ask the lender for a new appraisal: If you find you have a good case and the first appraiser will not budge, ask your lender for a second opinion, which you might be charged for. Depending on how convincing your argument is, your lender has the ability to override the estimate.
If these tactics fail and you cannot make up the shortfall, you may find yourself moving on to another property. If is was meant to be, it will be, is a good philosophy in this instance. Please visit my web site at www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home and easy access to view local area homes for sale.