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Posted by
Thad Cardine

Does a buyer have any recourse if an appraisal doesn't seem accurate? In our case, we're afraid it will be too high.

The seller has agreed to reduce contract price to the appraised value. We agreed to the contract because thought the asking price was high. Now we're afraid the appraiser will be influenced by the asking price on the contract. He will be unaware of the special circumstance. If we feel the appraisal comes back too high, do we have any recourse? Is it ok that they know that we have this agreement?

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Does a buyer have any recourse if an appraisal doesn't seem accurate? In our case, we're afraid it will be too high.

By Thad Cardine   
Posted on Jun 04, 2018 in Topic: Home Buying
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The seller has agreed to reduce contract price to the appraised value. We agreed to the contract because thought the asking price was high. Now we're afraid the appraiser will be influenced by the asking price on the contract. He will be unaware of the special circumstance. If we feel the appraisal comes back too high, do we have any recourse? Is it ok that they know that we have this agreement?
Status: Open
Viewed: 1090
Asked by: Consumer
Posted: 6 months ago
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Silver
Yvonne Chauvin
about 5 months ago
Hi Thad,

In order to properly answer your question, we would need more details- are you working with a Realtor, have you signed 1-4 Family Contract to purchase the property?

If the answer is yes, then your price has been agreed upon on the 1-4 Family contract. A higher appraisal will not affect your contractual purchase price (paragraph 3 C.).

Your Realtor will be able to answer any questions you may have in regards to your transaction.
Thank you,

Yvonne Chauvin Realtor
Better Homes and Gardens Gary Greene
281-686-0143
yvonnechauvin@yvonnechauvin.com


about 5 months ago
Bronze
Anna DeMoss
about 5 months ago
An appraisal outcome should not be influenced by a contract price, but rather the market's reaction to the particulars of the subject (house in question). While the appraiser is provided the contract and, as part of the appraisal process, must analyze the contract, the appraiser's focus should never be to raise or lower an opinion of value to meet the contract price or be influenced by the contract. Appraised value is based on closed sales, not contract prices or active or pending listings.
AnnA DeMoss, AnnA DeMoss Appraisals


about 5 months ago
Platinum
Ryan Kohn
about 5 months ago
Appraisers are used by the lender to ensure the value of the home is substantial enough to cover their risk in the event of default. Appraisers are unbiased 3rd party with no obligation to buyers, sellers or lenders. You should not attempt to influence their opinion, as it will be a valuation of current market value at the time. This is only market value, it should have no bearing on what the home is worth to you (represented in your offer). With that said, if you hire 3 different appraisers, you will most likely come up with 3 different values.
If your agent knew you were uncomfortable with the purchase price, they should not have advised you to place the offer. Betting that the home will appraise for less than the offer is a Gamble in any scenario, no matter what. If you have time left in your option period, you should address the issue by reducing the offer price, or cut your losses and pull out if you can not afford the home at the price you offered.


about 5 months ago
Diamond
Darby Grimmett
about 5 months ago
Hi Thad,

I actually own a local, residential appraisal company as well as my real estate sales business. While the response to this question is way more in depth that this forum will allow me to type, I can highlight a few things.

1) Appraisals are based on closed, comparable sales. Appraisers make adjustments for differences between properties in order to determine an adjusted list price - this goes beyond "price per square foot" as price per square foot literally only considers the price and square footage and not the differences between properties (size, lot, lot location, pool, upgrades, etc).

2) The appraisal is an unbiased opinion of value based on these closed sales. In other words, the appraiser doesn't care what the contract price is or what the list price of the house is. If you were to get 5 different appraisals I can bet you'd get 5 different opinions of value.

3) If you felt the home wasn't worth what it was listed at or what was offered I would not have moved forward with the offer. However, I would trust you are working with a competent REALTOR who knows how to comp properties and advise on an offer based on the market.

4) If your appraisal comes in higher than your offer price, I'd be happy - you got a deal on the house that is below market. Unless the house is way under valued, chances are the appraised value isn't going to be that far off the actual contract price (it may be right at purchase price, a couple thousand over). Of course an appraisal can come up short as well but I'm speaking only to the higher value since that's what your post referenced. Note - the Seller should NOT have a copy of your appraisal, only you should.

Hope this helps!

Darby Grimmett
Keller Williams Realty
936-827-9217
darby@darbygrimmett.com


about 5 months ago
Disclaimer: Answers provided are just opinions and should not be accepted as advice.
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