There is no information if Seller is represented by real estate agent. Assuming that he/she is, then I would assume that his/her agent prepared CMA for the Seller before house was placed for sale. I am assuming that you as the exclusive buyer's agent, you also prepared CMA of the property in question, before you prepared the offer for your buyer to purchase this house. I assume that you gave your client, home buyer, advice on price before offer was submitted. Since contract to purchase the hous...

There is no information if Seller is represented by real estate agent. Assuming that he/she is, then I would assume that his/her agent prepared CMA for the Seller before house was placed for sale. I am assuming that you as the exclusive buyer's agent, you also prepared CMA of the property in question, before you prepared the offer for your buyer to purchase this house. I assume that you gave your client, home buyer, advice on price before offer was submitted. Since contract to purchase the house was executed, it means that the price offered was acceptable to both parties ie seller and buyer. You didn't say if your buyer has conventional home loan or FHA loan. It makes difference in this case, because if it is FHA loan, then appraisal will stay with the house for 120 days. It means that home seller will have problem to sell house within 120 days to another buyer with FHA loan for higher price than the current FHA appraisal. But if another buyer will be a cash buyer, or buyer with conventional loan then new appraisal will be ordered and it can be higher than current appraisal. If current appraisal is not for FHA loan, then it will not stay with the house, and seller has a chance that next buyer's appraisal will be more favorable to seller. The seller has no obligation to reduce the price of the house by $20,000. Especially if seller is not in a hurry to sell the house. Not all appraisers are the same, and yes they are making mistakes, and because of that, many deals can fall through. Because house did not appraise at the selling price, it means that Property Approval is not obtained according to Paragraph B(2) in Third Party Financing addendum. Paragraph B (2) in Third Party Financing Addendum says "If Property Approval is not obtained, Buyer may terminate this contract by giving notice to Seller before closing and the earnest money will be refunded to Buyer."

First I think that to understand this particular question where there is a lot of missing information that will help to understand the sellers mindset, but the simplest explanation is that you entered in to contractual agreement to buy the home and the appraisers opinion of value does not change the contract unless there is specific language in the contract regarding appraised value either on the 3rd party addendum or written in special provisions. From sellers view point, your client has some f...

First I think that to understand this particular question where there is a lot of missing information that will help to understand the sellers mindset, but the simplest explanation is that you entered in to contractual agreement to buy the home and the appraisers opinion of value does not change the contract unless there is specific language in the contract regarding appraised value either on the 3rd party addendum or written in special provisions. From sellers view point, your client has some financing issues to work out. Did you prepare a CMA on the home prior to making the offer with your clients? If you did and the CMA supported that it should have been in the range of the appraisers opinion, you and your clients knew it was overpriced at the time and were okay with the offer, so what has changed for your clients now other than you have confirmation of that fact? I would have advised the buyers that they were entering sketchy waters making an over priced offer if that was the case. If your CMA supported the agreed upon price then you now have to figure out the aftermath, but the seller is still under no obligation to change the price. As someone that represents both buyers and sellers, I feel that it is our job to do the homework a head of time and appropriately advise our clients to prevent these issues from coming in to play. Assuming that you did your homework, unfortunately it can, does, and will happen again that an appraiser gets the value wrong and you end up in a pinch.....remember that it is literally one persons Opinion of Value that holds all the cars in this situation. Dig in to the contract to see what protection your client has, reach out to the lender and ask if there is a appeal or review process for the appraisal(rare but sometimes possible), and see what you can negotiate!