It was the picture-perfect deal. The buyer found his first home, and he was bubbling over with excitement. The seller had an offer to feel good about. Inspection was done. A few repairs were requested. And the repairs were made.
But then the call came. Appraisal came in low.
That one always stings. Doesn't matter if it comes in just a couple thousand under the purchase price or several thousand under. Someone is telling the seller that their house is not worth what the buyer is willing to pay. Ouch.
Even with the most accurate comps and proper adjustments for improvements, it is still difficult to digest this information. But as the listing agent, part of my job is to help my seller understand what could happen if this buyer walks and we start over from square one.
- More comparable homes could sell in the meantime at even lower prices than the comps in the current appraisal, which would drive down the value of their home even more.
- If they've already moved out of the home, their carrying costs continue, sucking more money out of their pocket.
- Even if the next offer is higher than the current one (which is pretty rare), the house still has to appraise (assuming there is an appraisal contingency, which there more than likely will be).
It's a tough market, but it is what it is. Even though we've seen appraisal issues more frequently during these tough times the past few years, it is never easy to have this difficult conversation with the seller.
To create any sort of false hope for a higher appraisal and not be upfront with them about the realities, is to provide a disservice to someone who has put their trust in my expertise. Being upfront and honest is what they need to help them make the most educated decision about how to proceed.
Originally posted at http://peggywester.com/appraisal-falls-short-ozaukee-washington-county-real-estate/