Our last post addressed low Barrington property appraisals from a buyer perspective. Meaning they came in lower than the sales purchase amount. Now we’ll provide the sellers side of the situation.
Barrington property appraisals are carried out when buyers want to buy a home and finance it with a mortgage. Because we had a significant market tumble in recent years, cash buyers are also opting to have an appraisal to make sure they are not overpaying for homes. The buyer pays for the appraisal. You are notified that the appraisal is received for less than the amount on your sales contract.
The first thing is to get a copy of the appraisal as proof that the amount is low. This would normally be achieved through the attorney channels. Have your attorney ask for it. Once you have seen the valuation given by the appraiser and confirmed what the buyers are saying, please note there are things that should not be done.
- First, you as a seller cannot dispute this appraisal with the appraiser and nor can your listing agent.
If either of you contact the appraiser it’s likely the lender’s compliance department is going to be notified by the appraiser. This is strictly regulated and prohibited by Appraiser Independence Requirements (AIR). Besides the potential fines and financial risks associated with this behavior, especially for the agent, the main problem with either of you contacting the appraiser directly is that the lender might not be able to close the loan as the regulators (TILA) prohibit a lender from extending credit when appraiser independence standards have been violated.
Imagine how your buyer is going to feel and what about you, the sale is lost! I hate to say law suit but……..you never know.
Appraisals are meant to be independently carried out. We don’t want to fall back into the problems of old with a market full of fraud, mortgage defaults and the like. New laws are in place now.
If you feel the appraisal is wrong you may ask for it to be reviewed but you must have a legitimate basis for the request. In other words if you feel there are errors on the appraisal you must point out what they are and why they are incorrect. A review based on your emotions will not make it past first basis. If you decide to do this, let your attorney know and they can find out what you need to provide and to whom.
Reviewed Low Barrington Property Appraisals
After the review you’ll be notified of the result. Appraisers are licensed. It’s rare if ever they actually make a mistake, so we’ll carry on here as if that’s the case.
The appraisal amount has been re-confirmed at a price lower than your agreed purchase agreement.
What Can You Do?
You can ask the buyer to proceed at the original agreed price. They’ll will be required to come up with the difference in cash. Put yourself in your buyer’s shoes and think how you would feel about overpaying. Of course it depends on how much but the larger the amount the less likely your buyer is going to agree.
You can agree to the lower price and move forward with the sale. This is the quickest and easy solution to the issue. But some sellers might not like this idea, feeling their home is worth more. Should you decide to stick with the contract price and risk losing your buyer, consider this for a moment.
- How long will you wait for another buyer?
- Are you assured of reaching the same price on your sale?
- Will your sale terms be as favorable?
- What happens when the next appraisal comes in at even less that the first?
- Is your moving situation going forward at risk and is there any financial cost associated with that?
It’s a risk and only you can chose to make it or not. Just weigh up all your pros and cons before making your decision. Is all of this worth risking your sold sign?
What About a Buyers Perspective?
View low Barrington property appraisals from the buyer’s perspective.
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