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Finally! An offer on the house; it's time to move on with the relocation. Find a new home, make arrangements for household goods to be shipped, say goodbye to friends and neighbors. Not so fast. The buyers' mortgage appraisal is in and it came in lower than the offer price. The offer only bearly covered the mortgage amount to begin with, now the deal is falling apart.
Buyers and sellers are holding their breath waiting for appraisals to come in. "Appraisers are being super-ultraconservative, the appraisal process is actually stopping properties from appreciating," says John Reilly of Century 21. "They are making no allowance for the fact that part of the value of anything is what a buyer is willing to pay and what a seller is willing to accept."
Appraisers say they're echoing the reality of the housing bust, in which home prices have declined about 35 percent from their peaks. According to the Appraisal Institute, "Appraisers don't set the real estate market: they reflect what's happening in the market. Think of the appraiser as a mirror, reflecting the market, and the market is depressed as home prices have fallen far below values of a few years ago."
When an appraiser comes in below the contract price, sellers and buyers have a few choices:
- The buyers ask the sellers to lower their price to the appraised amount
- The real estate agent asks the appraiser to take another look and provides better comparables
- The buyer goes to another mortgage company to get another appraisers opinion
- The seller and the buyer split the difference and the buyer puts more money down, or
- The buyer walks away and buys something else.
When selling a home, this is an unnerving event. You think you can make plans and move on, but you can't. When buying a home, it can also be disappointing but if you can buy the home for less than what you were first willing to pay, you're delighted.
Everyone involved in homesale/purchase transactions must try to make sense of this "imperfect market". NRI Consultants have had to work through many of these situations with our customers. We are helping our customers resolve the issues and find the solution that is right for them.
If you need more information contact NRI. Or call us at (800) 598-8887. | 
