Low Appraisal

[drelldrell]

Deleted

[Boldilocks]

The house we are buying appraised for lower than our agreed purchase price - but only a few thousand, not like yours.  We got the seller to come down a little, and are taking less in seller concessions.

I had provided a list of comps to the appraiser, as we were doing For Sale By Owner, with no realtors involved, so I had to have a good list anyway.  They ended up using 1 house on my list, but 2 that weren't - both of which were in not-as-good neighbourhoods, and which had sold over a year ago!  It's hard to get good comps for this house as it is the best neighbourhood in the whole twon and houses just don;t come up for sale there very often.

Anyway, I think with such a big gap, you have the leverage of that appraisal.  The cash buyer you were talking about offered $255,000?  That's still well over appraisal price and though he isn't looking for a loan, if he's trying to seel it on then it's not going to fetch as much.  Also, if the seller decides to walk and put it on the market again, there is the spectre of that appraisal.  It's making his house look way overpriced. 

If he wants to go ahead and get a second appraisal, then why not.  But are they really going to come in with such a big difference to bring it up to your offer price?  If yes, then you're fine.  If no, then he has proof in his own hands that his house isn;t worth hwat he thinks it is and he might be even more willing to come down.

[ShanetheMortgageMan]

FHA prohibits "appraiser shopping", so a 2nd FHA appraisal probably isn't likely (it's only permissible if the underwriter reviews it and finds material deficiencies).  Plus this appraisal sticks to the property for 6 months for all new FHA buyers.  That is quite the difference though, so to get an explanation you may want to ask your loan officer to ask the appraiser what the major differences between the two neighborhoods are that justify the values in your home's area to be so much lower.

[ShanetheMortgageMan]

That makes a lot of sense then - pending or listed sales are given less weight than closed sales.  You can always call the appraiser and ask questions, worst they can say is you have to ask them through the client (which is the lender).

If you make an offer on another house the process starts all over again.  Nothing about the current home's value or price would influence the underwriter's thinking regarding the new home.