Gwen Fowler Real Estate, Inc.®

The appraisal can stop EVERYTHING

Posted By Gwen Fowler @ Apr 2nd 2024 4:02pm In: 60 Second Insight

The week our appraisal came in low.  The appraiser did a great job, went beyond what was expected but could not show the price the listing agent had put on the property.

History:  The house was build and sold in March of 2023.  The closing price was $333,000 in 2023.  The buyer, who is now the seller, got a VA Loan.  Knowing he got a VA Loan and had not owned the property for a full year made this a hard sale.  This house was in competition with new constructions the builder is building and finishing now, they are on the market  at less than the current seller was asking for his.

The appraiser did his job, he provided the seller and the current buyer with 6 comparables supporting his appraised value.  The contract is subject to said appraisal.

At this point we can:

1) End the contract and go back looking for another house

2) Pay the contract price, which is more out of pocket for the buyer and with the improvements he is planning: fenced yard, vinyl plank flooring in the primary bedroom and sodding the back yard he will be upside down.

3) Negotiate the price to the appraised price--which also determines the tax value for property taxes--and close.

Stay tuned, I will update this as the events unfold.  

We closed!!!  Let me know your worst closing story.  I like to hear about things that can be cured.  See you in the future!! Gwen

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Comments (2)

Gwen says...
on 04/18/24

We closed on Tuesday. It was a trial and could have gone smoother.
1) the seller could have taken over his loan--lower interest rate, no appraisal, and as he was putting down 25% plus part of the seller's closing costs it would have been somewhat cheaper---this was not given as an option
2) The seller left money on the table. If he had allowed an assumption, then the buyer would have paid more for the house but less in closing costs and interest. It all comes out in the end.
3) Future: we will ask if the loan is assumable. Lower rates make this an option even if you are preapproved with a lender. Go with the cheaper interest and with the down payment you are comfortable making.

Gwen says...
on 04/05/24

4th option is to negotiate. The buyer wants the payoff on the loan and to understand all the costs the seller is incurring. He is willing to help but does not want the purchase price to be above the appraised value. We are working through the weekend. G

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