Appraisal Issue, Question & the agent's nutty reaction:

Apologies, it's a bit long... Our mortgage guy, Dan, called to let us know that there MAY be an issue with the appraisal... He's wonderful and always great about giving us a heads up on possible problems. So, he said that the appraiser (who is licensed and been doing this for 30+ years) did a preliminary look and will go later in the week to do the formal appraisal but in doing the preliminary look he is already concerned that the home we are buying will not appraise for the price we agreed upon... It is about $20,000 off. So, the house is appraising for 20 grand less than the price we went to contract on.

At this point, I called the listing agent on the house who I know fairly well and explained that we need to wait for the formal appraisal but I think there might be an issue coming down the pike. He is normally fine but can be a little eccentric and he can sometimes be ruthless and rude, so I know this, so I went in very calm in my approach. Well, he went like haywire, going on and on about how we should just walk away, kill the deal, just say the word, make a decision. I was like umm what? I just dead-pan stated AGAIN that we do not want to walk away, we never said ANYTHING of the sort, we just want to let you know -- and I don't think he was surprised, even though he reacted so oddly, because for weeks he has been asking about the appraisal, over and over - I think he knew this might be an issue.

For us, we offered a little more than I knew it was probably worth because I wanted the location and this is going to be our forever home so I didn't care that much about 20 grand.

So, finally, after 15 minutes of being like calm down to the seller's agent who was having a stroke lol he's telling me we need to come up with more money or walk away - now, I don't let this affect me because I know it's a bunch of BS and scare tactics but he acted so crazy. I had him on speaker, DH was there, so finally he says to ME (now, mind you, I can't stress enough how monotone and calm I was) that I'm "emotional because I'm pregnant" and to "put your husband on the phone". Me emotional?... when he said that I had to physically keep Vinny from jumping through the phone to kill him. What is this? 1950? Don't let the pregnant little woman talk, put the MAN on the phone. How offensive, gag me.

The guy is just obnoxious and I even said to him, we will see what happens once it is done - I even said, I can't go over hypotheticals right now, but haven't you EVER had a property not appraise for the price it should have? I mean, it is pretty common. He's like, no I haven't. Come on, lie to my face? This is just ridiculous.

Has anyone had a situation like this? What happened? Did the sellers come down? Did you meet in the middle? What was the outcome and how did the other party take it? Bottom line, I'm not over paying for this house and if they want to re-list it and start all over again, that's fine, but anyone who needs a mortgage is going to run into the SAME issue.

Just looking for some experiences - if anyone has any, if they have been through this in the past. Thanks.

Re: Appraisal Issue, Question & the agent's nutty reaction:

we havent been in this situation...yet...but i have certainly asked about it

this is what i learned...RE agents on here, please let me know if this is even correct!!...

if you go into contract for price $X and the appraisal comes in at under price $X, as the buyer you can either (a) walk away; (b) try to negotiate a lower price with the seller; (c) negotiate with the appraiser; or (d) pay more, but i'm not sure how that works with getting a mortgage....

i think you should still go into contract....so at least the house is OFF THE MARKET...then worry about the appraisal later.

if you really love the house, i would definitely go into contract as fast as you can so you can take it off the market...

hth...and please update me...we may be in a similar situation soon (!!)

Re: Appraisal Issue, Question & the agent's nutty reaction:

Of course he has had a property not appraise, that's so ridiculous!

I would wait until the appraisal is accepted by the bank. They also do their own reviews. Take a look at comps, etc. if there are better comps, you can fight it- or you can renegotiate with the sellers. I've heard many stories about the parties meeting in the middle- which is probably the best idea. $10k on a forever home with today's interest rates isn't a ton of money- and for the sellers to relist knowing the appraised value is a big gamble.

Good luck! Oh and I would have went apeshit on the agent after saying I was emotional.

Appraisal Issue, Question & the agent's nutty reaction:

Our home appraised for almost 10k less than we needed for the mortgage. It took about a week or so but we ended up meeting in the middle. It was in the sellers' best interest to come down b/c the house was on the market for about 7-8 months before we made an offer and they were in a rush to leave since they had already purchased another house.

It's definitely a common situation.

Re: Appraisal Issue, Question & the agent's nutty reaction:

We are already in contract so that's good.

But we just have to see what happens with the appraisal - it should be interesting to see how the other agent handles this as he acts a little out of control at times.

Re: Appraisal Issue, Question & the agent's nutty reaction:

Honestly, I would have waited until the appraisal comes in to raise this. It's one thing if you have your own buyer's agent that you can trouble shoot with, but if you are going through the listing agent, who has to represent the seller's interests and not yours, then I would not go to him to raise issues or ask advice.

One thing I've learned in real estate is to not worry about things that may not happen. It seems you were aware that there might be an issue with the appraisal, but many times the real estate agent(s) involved will provide the appraiser with their own comps to educate him or her. I always do, and sometimes it's really necessary. Banks really don't have much control over who the appraiser is anymore - they send out requests from management companies who will assign an appraiser, and sometimes there are appraisers from the city coming out to LI, or even those from upstate (well, Westchester, Rockland, etc.). But even if the appraisal came in low, it might have been higher than you expect. And sometimes there are compliance issues to be dealt with (esp. with an FHA loan, if you are getting one), so I'd rather wait until the true appraisal report came in and deal in terms of facts with the other side, you know? Again, if you had a buyer's agent, then of course you could consult with them, but not if you are using the seller's agent to broker the deal.

That being said, if the appraisal doesn't come in, the bank will limit the amount of money they are willing to lend you, based on the loan to value ratio. So a few things can happen:

1. You can make up the difference by bringing more cash to the table;

2. The seller can come down in price;

3. A combo of 1 & 2 - the proverbial meet in the middle;

4. The appraisal can be challenged - but really only if there is a true basis to challenge... the appraiser used wacky comps and overlooked better ones that support the contract price; or

5. None of the above and the deal dies.

It's usually in the seller's interest to work with you on this. They often don't want to go back to square one, putting the home back on the market, especially if the appraisal is not too far off.

And if you are getting an FHA loan, the appraisal will stay with the property for a period of time. It used to be 6 months, but it may have been reduced to 90 or 120 days, I would have to check (you could ask your mortgage guy). So in other words, if you back out and they get another FHA buyer next month, that FHA buyer would have to use your appraisal that came in $20K (or however much) lower, and the seller would have the same problem.

But I'd sit tight, see what happens, and go from there. Not sure why the listing agent flew off the handle. You are in contract and you can't walk away without penalty unless your mortgage doesn't come through. And it's in his clients favor to get this deal through. Now, he can be extra vigilant about finding good comps to provide the appraiser with, so not sure what his problem was. But in any event, sounds very inappropriate and unprofessional!

Message edited 4/17/2013 11:20:38 AM.

Re: Appraisal Issue, Question & the agent's nutty reaction:

You might not mind paying the 20K but the bank might. Banks don't normally want to lend you more money than the house is worth at least that's what I was told....so if the seller knew that the bank wouldn't accept the contract price, maybe they would be more inclined to lower the price.

Appraisal Issue, Question & the agent's nutty reaction:

When we sold, we came down in price as they didn't want to pay more then it appraised for. We needed out so we accepted it and kept the process moving. Crappy but do you really want the house?

Appraisal Issue, Question & the agent's nutty reaction:

I would not have spoken to him. I would only speak to my buyers agent about anything related to price, negotiations, etc. you may have set him off to raise a hypothetical issue in your end. Until you have the final appraisal you shouldn't have discussed this with him. And ultimately a bank will not necessarily lend more than the house is worth.

Re: Appraisal Issue, Question & the agent's nutty reaction:

I am confused as to why you spoke to the seller's agent at all? He represents the seller's not you. Why didn't you speak to your own agent?

Unfortunately, now that you have tipped him off to a potential issue, he does have some concern. If the house appraises low, you are going to run into serious mortgage issues as no bank will lend more than the house is worth. That means you need to come up with more cash, or the seller has to reduce their price (which will directly affect him, as now his commission has the potential to be lowered).

Hopefully all will be okay with the appraisal, but going forward I would not discuss anything with the seller's agent.

Re: Appraisal Issue, Question & the agent's nutty reaction:

Posted by Karen

I am confused as to why you spoke to the seller's agent at all? He represents the seller's not you. Why didn't you speak to your own agent?

Unfortunately, now that you have tipped him off to a potential issue, he does have some concern. If the house appraises low, you are going to run into serious mortgage issues as no bank will lend more than the house is worth. That means you need to come up with more cash, or the seller has to reduce their price (which will directly affect him, as now his commission has the potential to be lowered).

Hopefully all will be okay with the appraisal, but going forward I would not discuss anything with the seller's agent.

Message edited 4/17/2013 2:57:34 PM.

Re: Appraisal Issue, Question & the agent's nutty reaction:

Hopefully you get the appraisal done ASAP and it's not an issue.

In the future, don't give the sellers agent any kind of heads up about any "potential" issues. The more time he has to prepare for worst case scenarios, the more time he'll have to screw you over....which it sounds like he would do in a heartbeat.

ETA - I see why you would have told him. Based on the way he reacted, and the fact that he is legally required to look out for his sellers, in the future now you know not to let him in on this kind of stuff.

Message edited 4/17/2013 3:06:13 PM.

Re: Appraisal Issue, Question & the agent's nutty reaction:

did you sign off on him being a dual agent?

if that is the case you should have been assigned another agent from the office to rep you

if that's not the case- then he is the sellers agent- not your agent

and he can show you other homes and STILL be a sellers agent -

in all my deals- I can't imagine any agent being flexible on $20K with out actually seeing a report-

Re: Appraisal Issue, Question & the agent's nutty reaction:

We sold our last home on our own. It was a cape, but we had done a TON of work to it. We blew out the back of the house and added a substantial extension. In that extension we created a huge, beautiful kitchen, and on the second level, an ENORMOUS master suite. We also added an inground pool with fence, pavers, the whole nine. This was NOT your typical cape, so we didnt price it as a typical cape. I guess you could say the modifications we made were borderline "too much" for our neighborhood, because when our buyer got an appraisal, it didn't come in at the price we had set, because of the comps in the area. Actually, there WERE no comps in our immediate area because we had changed the house so much...The appraiser ended up using sone colonials in the area as comps. ANYWAY....long story short, WE were about to kill the deal. The buyers were devastated, so we ended up coming down to the appraisal price (which wasn't a terribly huge amount), and then they met us halfway between the appraisal price and asking price with cash. They wanted the house THAT badly, and we felt badly for them because they had been living with the wife's parents for a WHILE and needed to get out , AND they really loved the house....so, we caved a little.
They had an agent working for them, and she was getting pretty aggravated because we wouldn't budge. She was giving our lawyer a really hard time.

Message edited 4/17/2013 6:00:00 PM.

Re: Appraisal Issue, Question & the agent's nutty reaction:

Do you have any idea on sellers situation? In other words how motivated are they?

I am assuming selling agent will be making arrangements for appraisal inspection since only agent involved. I would just mention to him that he better provide some supporting comps for appraiser.
It's a little unclear because you said you knew you were overpaying but you didn't care because would be your forever home. But then you say you won't over pay.

Lastly I'm sorry the agent you are working with was so disrespectful and rude to you. Nobody should be treated that way.

Re: Appraisal Issue, Question & the agent's nutty reaction:

Our house appraised for 25 K less than the contract price. The sellers came down 10K and we made up the difference at closing. We didn't want to lose the house over that much money so it was worth it to us. Like you, this is our forever home and we love the neighborhood so it wasn't a doubt in our mind. Good luck!

Appraisal Issue, Question & the agent's nutty reaction:

Last year, my house underappraised. Not by $20,000 but enough. We contested the appraisal, but the bank stood by it. The sellers and I decided to meet in the middle. They dropped the price by half the difference and then I was going to put up the rest in cash so it wouldn't affect my mortgage. But, my mortgage broker screwed up in the 11th hour and instead of my putting up the extra cash, I got a mortgage for 80+% which meant I was now paying PMI. I received the paperwork on the way to the closing, caught the mistake, stopped at the bank, had a screaming fit and caused a scene. But, in the end, I was going to not close and lose my rate if they tried to fix it so I just went with it. Now I am looking to refi. It was probably a unique mess of a situation, but my point is that houses do under appraise and you can find a solution. Good luck.

Appraisal Issue, Question & the agent's nutty reaction:

I would have gone bat Shizz crazy on him.

Bat. Shit. Crazy.

Second, (to the real estate agents on here) CAN they "fire" him?

Frankly, I would go down to the office and speak to his manger. "Put your husband on the phone".

Bat.Shit.Crazy. on him.

Re: Appraisal Issue, Question & the agent's nutty reaction:

Re: Appraisal Issue, Question & the agent's nutty reaction:

Message edited 4/18/2013 1:36:28 PM.

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Message edited 4/18/2013 3:11:17 PM.

Re: Appraisal Issue, Question & the agent's nutty reaction:

Posted by DaniRella

Posted by Kitten1929

Posted by Beth

Posted by Paramount

I would have gone bat Shizz crazy on him.

Bat. Shit. Crazy.

Second, (to the real estate agents on here) CAN they "fire" him?

Frankly, I would go down to the office and speak to his manger. "Put your husband on the phone".

Bat.Shit.Crazy. on him.

no they can't fire him- he works for the seller

So just for my own curiosity, is he looking out for their best interests in the deal, or only the sellers?

His best interest, first and foremost, are the sellers - those are his clients from the beginning and it's his listing. So, yeah it's the sellers.

He seemed much better today -- more like the "we are going to work this out" kind of approach where hopefully he'll just try to help the deal go through. It is in his best interest and the best interest of all the parties involved.

I'm just staying positive... as you can see, by my tone, I'm CRAZY emotional and pregnant and just NUTS and I should really have my husband post b/c I should be in a straight-jacket.

Re: Appraisal Issue, Question & the agent's nutty reaction:

he shouldn't have reacted that way

but from experince computers don't always tell the whole story on comps and value- it's a good starting point- but $20K isn't that much to come up with once you see the actual house and what it has to offer

if it was $100K then that would cause me some alarm and potentially not want to do a formal report

I'm sure it will all work out- it sounds like they are in a position to work with you rather then put the house back on the market

Appraisal Issue, Question & the agent's nutty reaction:

When we bought a house the appraisal came in $5k less. We didn't raise an issue and just put the extra $5k in. Now that I think about it, we could have gotten the seller to lower the price because he definitely was anxious to sell. But I thought we got a good price on the house, and didn't think the $5k was a big deal.