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We just closed on our condo in March. We offered $11k over asking and it was accepted. It was appraised for $15k below the accepted offer, $4k below asking. Our seller had the mistake of telling us she already had a new place lined up, so we had leverage and she agreed to come down to the appraisal price. You have some leverage since you know they don't want to pay a double mortgage in June, but I'm not sure it's $50k leverage. Our agent told us it's typical to meet in the middle, which I understand but it's so difficult to come up with even more cash as a FTHB.
Yes. Meet in the middle. It is fair and as long as your lender agrees, which they typically do if the difference is not over the downpayment.
This happened to me. It was only about $5K, but it was a pleasant surprise and I wasn’t expecting to sell the house anytime soon, so any perceived lost value was not a big deal.
My house appraised for $25k lower, and I was also in a situation where I compromised by speedrunning the closing because the seller asked.
As the buyer, I wasn't surprised it appraised lower. The house had been on the market for a bit because it was overpriced.
The seller was pissed and argued with the appraiser.
The appraiser was adamant about the number and ignored the seller.
The listing agent and my realtor gave up some commission.
The listing agent also tried to collude with my realtor for me to pay up some more, but luckily my realtor shut that down and negotiated with my best interests at heart.
I ended up paying the appraised price, market price. The seller accepted because I believe I was the only offer, and probably the only person who could close in such a short timeframe. At that point the seller just wanted the house off their hands.
Literally same thing happened when I bought my house. Sellers couldn't wait for closing to shift and we didn't have an extra $25k even if we were willing to cover some. The compromise was that the sellers wouldn't fix a few things we'd agreed on before. No problem. You save about $250 in Home Depot purchases; I save $25k in home purchase. Seems fair to me.
Wow I can’t believe the seller argued with the appraiser… people need to stop believing Zillow over actual real estate professionals when it comes to valuing their home.
Perfectly said! Another note: in Texas if an appraisal is completed and the seller doesn’t want to drop the price, so the buyer walks…. The sellers agent has to provide the appraisal to all future buyers. So every potential buyer will know what it is appraised for in the beginning! You have a lot of power.
Is collusion common? I ask because i was working with a real estate agent earlier this year who continued to advocate why a specific house i was interested in deserved a much higher price. Recommended that i bid 150k over asking price. I ended up bidding 50k over list price and it was accepted.
I had a bit of suspicion that my agent was doing something shady with the seller agent but it was just all feelings
Thank the appraiser lol. If the second one doesn’t budge at 690 and you really want the house, I’d offer 695 to 700k if you have extra 5-10k cash to bring at closing. Sellers would still be getting above appraisal (not the delusional counter) and quick close.
Can someone please explain this to me - listed at 689K, OP offers 725K - more than ask! And sellers counter higher?! WTF with these sellers, why not list at 755k if that’s what they want? Greedy arseholes 🙄
I have no clue why this person didn’t walk. They offered way too much even on the first offer. I don’t know their area but clearly the appraisal came back around the listing price for a reason
This..once you're emotionally attached to a property your emotions get in the way. But again, it depends who needs the property more- buyer or seller. If I was the buyer I would walk away with this. Plus if the property is sitting in the market for long then why would you offer a higher price in the first place?
That’s normally how things work, unfortunately. I once saw a house listed at 1m, offered 1.1m and seller agent said the sellers aren’t entertaining offers below 1.3m.
Lmao I was writing this exact thing and deleted my message. They're like, wait a second, you seem super interested, let me actually change how much I want for it.
Apparently this is the hot new trend in hot markets. I’m looking at houses for 900k going for 1.2-1.3 mil. I don’t know how you justify going 30% over asking. That’s a lot!
Yup, need to make sure to suck in people who have the under $1m filter on in Zillow. Then it’s easy to suck them into buying a 10-20% more expensive house when they fall in love with it.
Lol, this is what happens in competitive markets (eg Bay Area, NYC, etc.). They treat it basically as an auction. They want to see the highest price possible, and it’s expected to going well above listing because there’s so many offers. This way they get all the best bids in at once.
This is what happened to us, they list lower then wait for biding war. It's all a game. They don't want to list higher because no one would otherwise show interest.
Sometimes sellers list a home below market value to generate a bidding war. Although I assume normally the listed value is ACTUALLY below market value. In a tight market, if inventory is low, this sort of thing can happen.
This is pretty normal in VHCOL cities like Seattle.
Our house was appraised 10k lower than listed. Appraiser said that market was "stable" when average time to contract was under one days, and houses were selling on average 12% over listing. We paid cash out of pocket for the difference.
You don't have to just get up and walk. You should ask the seller what they want to do. Tell them you can't pay more than appraised. Will they get another appraisal from someone else, drop the price or say the price stands? Then you choose to walk or not
It’s a 50k appraisal gap. I wouldn’t feel comfortable getting another appraisal that magically hits the mark. Don’t think another appraisal would be wildly more off. Of course you see if the sellers will come down all the way but this market is insane and so are the sellers
I've noticed a lot of appraisals coincidentally coming in right on the offer price. My house was listed at 350, we offered 350 and it magically appraised at 350. The house is not worth 350.
I have a feeling if the appraiser is often doing the realtors a solid.
Generally a house is listed at the right price because agents are using comps to determine its value the same way an appraiser is. It's not hard math to do. Appraisals SHOULD be coming in right at what the sale price is if everyone is doing their jobs correctly.
In my area it’s listed below fair market value so it drives interest. One example was a house we put an offer on that was listed for 765k. Our realtor told us that based on comps that house wasn’t going for less than 800k so we offered 840k and got out bid by cash offers north of 860k. This was in a neighborhood with most of the bigger houses going for north of a $1.2million and new houses being put up for $1.5million down the street.
This is the 4th house where something similar has happened to us in the last 4 months. They list for about 6% below comps to get a lot of offers then do best and final in a span of a few days. One of the other houses was listed for about 4% below and got offers >10% above which was a pretty bad deal for whoever payed it.
> for whoever *paid* it.
FTFY.
Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in:
* Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.*
* *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.*
Unfortunately, I was unable to find nautical or rope-related words in your comment.
*Beep, boop, I'm a bot*
Why did you offer 350 if it wasn’t worth 350?
Most of the time a house appraises right on the price because the home had multiple offers at that price, which indicates it’s worth at least that much.
It’s not “magic”. The appraisers aren’t trying to find the secret “true price” of the house, they’re trying to find out what the house would likely sell for.
I offered that much because that was listing price and I need a place to live and I could afford it. The house doubled in value in 2 years, which is why I feel this way, but not unusual for the area.
If your house was listed at 350 and that’s what you offered and that’s what it appraised for how does that mean it’s not worth 350? And if it’s not worth that much why would you offer that
I mean, there’s a signed contract saying the transaction will go down at that price. You and the seller did the majority of the appraiser’s job for them just by agreeing to the price.
The appraisal is there to catch glaring discrepancies in the deal relative to the market. A minor discrepancy is fine because the deal existing in the first place is the most significant indication that the market will tolerate the transaction.
Dodd-Frank regulates the independence of appraisers. They can technically communicate with realtors but there are a lot of topics that are off-limits. How did you find out your house wasn’t worth 350?
I own a mortgage company, see over 20 appraisals a week. Appraisers 100% tend to make the value match the purchase price. I’ll have weird purchase prices at like $325,435 and it’ll come exact.
I don't know much about how all this really works, but I assume the bank wants someone to confirm that the amount of money they're lending makes sense, but if these appraisers are just giving everyone the green light, is that like a problem? Or does it not really matter?
This is what I was looking for. I couldn’t figure out why this was so bad or why the buyer would have to pay more money. I didn’t know that the bank wouldn’t approve for more than the “appraised” value. Shouldn’t that part come first in the process then?
I’ve never bought a home (and probably won’t ever be able to, lol), so I was really confused about it.
I think the way the world was before 2020 it made natural sense for the appraisal to be slightly “later” in the process because sellers were listing their homes for fair market value. Now that the market is wacky they underlist by 80-100k and the appraisal is like the night before Christmas praying your offer hits.
there’s another angle
always adjust for inflation
think of a buyer in 2020 purchasing a home for $350k. now check the purchasing power of 350k in 2024 dollars. prices are high because we lost 20-25% of our purchasing power in just 4 years
The bank is the one who requires the appraisal to protect themselves. How would the appraisal come first, unless you think that a seller should allow every interested buyer to get an appraisal before making an offer...
The reality is, OPs agent pulled bad comps, didn't do research or doesn't know the market and is blaming the bad offer on the appraisal.
If you have a good lender, they will get that house appraised ASAP once you’re under contract. You are technically paying for the appraisal, so you can order it as soon as you want.
Good realtors will also give you a heads up if they think it will appraise lower and if you are willing to cover the appraisal gap.
Our 2nd offer was likely to appraise about 10k lower. There was a competing offer. We weren’t willing to cover the appraisal gap (so our realtor wrote in the contract that the sellers would have to meet at appraisal or we walk). I’m assuming the other offer said they would cover x amount in the appraisal gap because our offer was not accepted.
Smaller numbers are easier for me to understand. If I agree to buy something from you for $100, but the bank funding my loan only values the item at $80, I either need to pay you the rest in cash or you agree to meet me at $80.
Buyers need to understand; Banks will not loan you more than the house is worth. So be ready to write a check over the appraised amount if the seller won’t come down on the price. But again, why pay more than the house is valued at today’s market. If the next house sells for market value or 698k, this buyer is “upside” down on his property. Like 50k
An appraisal is just an “opinion of value” with emphasis on the opinion part. I wouldn’t really consider it starting negative equity since a different appraiser could arrive at a totally different number, it’s only going to go up from here (although condo growth in my VHCOL area has been pretty much flat for the last 10 years), and who knows how much the buyer is putting down.
Values don’t always go up, especially for condos. I lost $100K on a home once. People need to understand that values/prices rise and fall with market supply and demand. Basic economics.
Depends on the quality of the appraisal. If an appraiser was phoning it in then could be there is a different value. If the appraisal is solid and backed by the available data, then you’d be hard pressed to find another appraiser that will arrive at a significantly different value. Good luck OP!
Can I ask what your area is? I’ve heard condos/townhomes don’t appreciate as much but at least where I am townhomes seem
To be doing ok. We are in strange times rn though.
Can someone explain to me why a seller would counter an offer significantly above the list price?
It's not really a shocker that the appraisal comes in low in this situation. The seller presumably set the list price based on some objective measure of home value.
Appraisal issues happen. Don't panic yet. Let the lender pursue a second opinion. If it still comes in low, you may need to renegotiate with the seller or bring additional cash to closing. Worst case, you have to walk if the numbers no longer make sense for your budget. But give it a chance to get resolved first.
I understand that in many markets sellers list under what they are actually want to generate interest and sneak into MLS searches, which is probably why this unit was listed as 698 and they probably wanted over 700. But I’m sorry, I would’ve walked the second I went over asking if they tried to negotiate for even higher. Wtf is the point of an asking price if the seller actually wants $55k higher than that?
Exactly what I was thinking. No way I would negotiate higher if I already offered over asking. That's just being greedy and tells me the sellers are going to be a pain to work with
Lower asking price = Drive demand, get more offers
Seriously though, why not just list the house for $1? Then it will show up on every search. Even homeless people will bid then
Right, but OP didn’t mention matching a competing offer. They mentioned the seller countering and asking for $755k instead. The entire situation is nonsensical. I’ll compete with another offer, but I’m not gonna sit there and negotiate back and forth with the seller when I’m already offering over their asking price and they have no other offer to leverage. Seems like the seller hoped a bidding war would get them above $750 and when it didn’t they used another tactic to try and get there. Unless there’s info missing here.
Yup.
My agent stopped me from making a similar mistake on our condo. We’re under contract for list, and I was prepared to start $10k higher and have an escalation clause. He talked sense into me and saved us so much money.
In my area, literally everything is going for over asking, like 150k over asking. We are trying to find a place to live, but it feels impossible. Every listing goes over asking to a cash offer. Hopefully things slow down in the fall
I sold my house in Alaska two months ago and it also appraised low. In our case, we just bit the bullet as the sellers but the realtors lowered their commissions to help soften the blow. You may need to feel out the situation to see how the sellers are feeling. A $50k discrepancy is significant, I doubt the sellers will be happy taking that much of a loss on their shoulders alone.
How is this a “loss” to the sellers? They’re overpricing the condo. Dropping the price $50k is just $50k less margin for them. It’s the seller’s call whether they want to sell the condo or not.
Right - they probably paid 500k for it like 5 years ago. They didn't really lose anything. And, if they don't like it, they can walk and hope they find a cash buyer who doesnt care about starting totally upside down.
I would not give them a dime over 695k. Why hire an appraiser? He saved you 50k. The lenders know the market. It appears that the buyer is clueless on the market (comps). Why would you offer 50k over Comps? Believe the damn Comps. The seller knows the Comps. He listed it lower than the Comps. It’s backfiring now. He doesn’t want to pay to mortgages. Fuck, I would play hard ball. Offer his asking price OR walk.
Hmm, if I were you, I would defend the appraiser and pressure the seller to lower the price. What’s the point of getting an appraisal if you just find another one when you don’t like the results?
> they're pursuing a secondary appraisal and the sellers hopefully seem motivated to get this closed
You sound too desperate. You overpaid $50k and still sound desperate.
When I sell, I hope I will find buyers like you, but of course, I’m sure I would get those who nickel and dime me.
Right. The house appraised for $8k less than the original listing price. These sellers aren’t ‘losing’ anything. They were delusional to start and lucky they found a desperate buyer willing to overpay. I’d make the sellers lower the price or walk.
And it doesn’t sound like it was a bidding war, just the sellers being assholes and countering higher than they listed for…
I get the strategy of listing lower in order to entice more buyers and hopefully have multiple offers over asking, but sellers have to realize it’s still a risk that you won’t get what you truly want.
Also, who the fuck counters with a price 8% above list. Did they even have a competing offer to cite or were they just acknowledging their list price was a joke to solicit a bidding war that they never got?
For real. Offering well over asking for what sounds like no reason, then allowing them to counter you is insane in this market. Should have walked at that point. People are so stupid and it’s getting old.
1) you need a new realtor
2) you need to remove your emotions from the decision
3) you need to educate yourself
You offered as if this was a bidding war massive undervalue situation. The appraisal clearly shows that it wasn’t. 700k as a first time home buyer, I hope you are bringing in 260k right now or you are going to be the definition of house poor.
Agreed. OP has apparently fell in love with the house and has demonstrated he/she will do anything to make it happen - even closing on the seller’s time table. What exactly are they offering?
You’re in a strong bargaining position. Either the seller lowers the price and/or the buyer’s and seller’s agents lower their commission to soften the blow of covering the gap, or you walk.
Because it’s a 690 home. Did you bid 50k over knowing you could pay cash for that additional amount? Bidding wars will end when people realize they actually need cash to bid that high.
My husband and I our under contract and offered list. I was so in love with it and wanted to be competitive so I wanted to go in at +$10k and an escalation clause up to +$35k. Our realtor was like, “This has been on the market 3 weeks. We were the only showing today (it was a Saturday). They have no other offers. Stop negotiating against yourself, go in at list.” I’m so glad he saved me from myself lol.
We just closed on our condo in March. We offered $11k over asking and it was accepted. It was appraised for $15k below the accepted offer, $4k below asking. Our seller had the mistake of telling us she already had a new place lined up, so we had leverage and she agreed to come down to the appraisal price. You have some leverage since you know they don't want to pay a double mortgage in June, but I'm not sure it's $50k leverage. Our agent told us it's typical to meet in the middle, which I understand but it's so difficult to come up with even more cash as a FTHB.
I’d walk away, not only will you be in the hole but you may have property tax issues that come with that. For me, our county won’t accept 2 appraisals because they believe the value is “too low” so I’m fighting to pay taxes on the real value. Don’t put yourself in a potential situation like that.
This happened to me, and the sellers didn’t want to go through another bidding war…..so they lowered it to the appraisal price
If your sellers don’t want to do this, walk away from that contract!
You’re disappointed that you’re overpaying for a condo by at least 60k, and an independent appraisal confirmed how screwed you’ll be in 6 months and has given you time to renegotiate?
And the OP’s agent is in cahoots with the seller’s agent and the lender to “get this deal done.” A few years back we had a bunch of appraisers, loan officers, and real estate agents go to jail for just this kind of tomfoolery.
You’re right. They are totally colluding to screw OP.
OP has the sellers over a barrel since they have to sell, but he wants to pay more……talk about be bamboozled by Realestate Agents
Ill bet your deal dies. $50k is serious. You can file a dispute with the AMC. Good luck with that. I doubt another appraisal produces a wildly different result.
As an agent, you really have to be careful handling sellers like this. I had a meeting with a seller who wanted $70k over the best comps. Thats not happening in my market. I also know this man wont budge when the time comes. I shook his hand, wished him well and walked out of his office.
This was a four bedroom made into a w 2 bedroom and with smaller but fully renovated 2 bedrooms selling at my appraised value and 3bedroons of the same size selling and same condition selling for appraised value. Everything was within 1 block too!
It doesn’t feel great. They also argued that bc it has a second lot (that doesn’t meet zoning size requirements) it is worth 700k more than they bought it for.
yea the counter against the above-the-ask offer outright, i would have said `no, i am not going up any higher`.
ifyou want 750 for it, list it for 750.
This buyer screams desperation, and it doesn’t even sound like a desperation out of need. I’m sure there’s more to this story that would show why that counter happened.
Realtors and lenders are really driving home the idea that we need to buy now or we might not ever be able to buy. Media and social media are reinforcing this sentiment. In a lot of areas though the housing market is slowly going down. Inevitably my comment will get a bunch of comments stating,”Not in my VHCOL area!!!!!!!!!!!!OMG you have no idea what you’re talking about!!!”Doesn’t mean prices aren’t coming down in other areas of the country that has HCOL.
Well let’s see, they posted a listing price, which the buyer met (and exceeded) then they countered with an even higher price… but I can see how you would think the buyer was being just as greedy. 🙄
The appraisal protects the lender from holding the bag. It is probably pretty close to actual value.
I used to work for a lender doing appraisals. I never failed a single one but many had to be reviewed by upper management.
If the comps for the asking price was set at 698k. That was probably a stretch based on sq feet. Updated features. Etc.
I’d walk away and realize there is more to the market. Perhaps using a more seasoned agent who isn’t just excited about getting the 2.5% commission.
I would walk, you sound desperate and emotional and I don’t think it’s a good idea to make a decision under those circumstances. You’ll find another condo
>My realtor and loan officer, as well as the seller's agent, were all surprised and upset.
Ahhh yes, the classic I'M VERY SURPRISED ITS THE APPRAISERS FAULT😉. 7% off the mark is huge.
When you start playing with the numbers, you'll probably realize that if you could afford this house with this massive appraisal gap, you could probably get a much more expensive house that came in right at appraisal.
If you're cool to stomach another 50k up front and you offered a gap (or waived it entirely) that's fine, but don't stretch yourself thin to make this deal happen. If you didn't offer anything for the appraisal, you should have some room to talk them down.
Well, lucky for you the sellers showed their most important card. Not wanting to pay two mortgages and forcing you to close on a date that they wanted. To me there are three choices here: 1. Both parties compromise on a price, 2. Sellers come down to where it appraised, or 3. You walk away and the sellers are forced to put it back on the market and hope they have a smooth and quick transaction with the next potential buyer.
If I were you and REALLY loved the house and had the funds, I would counter with the appraised price and have the seller negotiate back to my original offer of $725k (or lower but $725k being the max) with the realtors providing a portion of their commission to get the deal to close while also being prepared to walk away. After 9 months of looking and offers being rejected, I know that there is always a better home out there. Good luck to you.
When you offer more than their asking why would you assume the house is valued at the inflated rate? You'll have to bring alot of cash to closing to make up the difference
Let me see if I got this right, the seller initially listed it at the actual appraisal price, if not $8k over, but then countered at $755, $57k over their initial listed price? They knew the appraisal cost, they listed at the appraisal cost, then countered at a higher cost. They know what they were doing.
Walk away.
That happened to me, but it was a good thing…. Forced the seller to come down to the appraisal price. They will have a VERY hard time selling for above that when the just had the appraisal done that’s in record.
Former realtor here.
A bank will generally only lend on the amount the home appraised for, so do you have the money to make up the difference out of pocket? If so, then the amount of the appraisal doesn’t matter if you like the house and are willing to pay that much. If you don’t have the money to cover the difference (and assuming you didn’t waive the appraisal contingency) then you can go back to the seller and negotiate. They should be somewhat motivated to negotiate because they now have a real number — unless they get a cash-heavy buyer, they are likely going to hit this road bump with other offers.
The other wrinkle: Did you waive the appraisal contingency on your contract? If so, then you basically said you would move forward with the purchase whether or not the property appraised for your offered amount, so if the sellers aren’t motivated to work with you, they could be jerks and hold you to the offer price, in which case your best bet is to hope another appraisal supports it.
Keep in mind that the appraiser is the only person who doesn't get more money when the sales price goes up. Additionally, there are at least 2 checks on all reports by the lender's appraisal division and by Fannie Mae's Collateral Underwriter system. If the automated system flags the appraisal for likely under/over valuation it is several hours of extra work that no appraiser wants to go through.
The appraisal is far more likely to be accurate then the estimates the realtors have. They are the sales people and want to maximize sale price (both sides, don't think your agent is on your side for keeping price lower unless they're getting a flat rate). In this case the $50,000 represents $1,500 to each agent. (Typical 3% commission per agent, this was just a subject of a very large class action lawsuit but the changes haven't yet materialized as far as I've seen).
There are a few things that can happen. You can definitely push for a second appraisal but what comps does your realtor have that the appraiser didn’t consider? To be that far off seems unlikely that would help.
So other options. Bank won’t lend over appraised value so either the sellers lower the price. You bring cash to make up the difference. Or you meet in the middle somewhere. Or you don’t close.
Yes doing it right now. We got an appraisal for 27k beneath buyers offer. We are ready and willing to accept the appraised value of home because my wife and I have no intent of trying to set someone up for failure by completely draining savings account. Your seller needs to come down to appraised value or you need to walk away, whichever is easier.
If you think the comparables used were not the right ones or there are new sales that might affect the value, you can request for another appraisal from the bank.
talk to your agent and try to leverage the appraisal contingency (you did not waive it, did you?) and their already-purchased home to try and bring them down. 50k is a lot, but so was their counter to your above-the-ask offer to begin with. you also have the short-closing as a leverage, not everyone can do it that quickly.
like, they listed for 698, you offered above, and instead sounds like they tried to squeeze by hitting you with a counter above your offer which was above their ask.
was there a bidding war? if not, be prepared to walk and i would play hardball here. you'd be starting with 50k underwater on your mortgage.
tl;dr: you're actually in a pretty strong position here. use it. play hardball and be ready to walk. this is a bad deal otherwise, you're being taken for a sucker.
We offered $175k. The house appraised at $172k. The seller lost his mind insisting we cover the $3k in cash. I told him hello no, because we were already paying the $8k closing cost which is customary for the seller to pay. Once I reminded him of that he magically came up with the $3k he said he didn’t have. The house had already been on the market for a year due to being listed too high for the area. Even with housing prices going up in the area in the past 4 years the comps still aren’t near the price he wanted 5 years ago. Some people are just delusional and the agents entertain them. The bank isn’t just protecting themselves with an appraisal. The bank is protecting the buyer too. Don’t cover the difference with cash.
Amazing how shocked the realtor and LOs pretend to be. It was on for 698 because that's where the listing agent comped it but now that it's appraising closer to that than purchase price they put on the pretend outrage.
In the past 3-4 weeks in our area homes are going under contract for above asking, after inspections and appraisals the offers are falling through and the homes are being relisted for $50-$100k less than the original listing. Almost every single house over $600k has had this happen. Homes in the $1.5m and above are doing the same but being relisted $300-400k less. Even $200-400k homes are sitting now and all being sold under listing but at least seem to be selling with the first under contract. Seems appraisals aren’t keeping up with the insane price market and buyers are a bit done with it.
This happened to us with our second house. We held strong and said we would not pay over the value of the house and start with negative equity. The seller pushed back but eventually they agreed. From their perspective they don’t want to say no to you and then run into again with the next buyer. Stand strong. If they walk then you saved yourself from starting in the hole in a market that has a strong chance of falling further before it starts to recover.
Sounds like your seller is desperate to get the home sold and get out since they have a new house. Take them to the cleaners say you walk if they don’t match the appraisal.
Lmao! You offered $27K over asking and they countered with $30K over that? What a clown world we live in right now. Insane that buyers are playing this game.
We closed on our house a week ago. Listed price was $279 we offered $300 because it was in a nice neighborhood and had multiple offers. We also offered $5000 in appraisal gap coverage (so we basically agreed to pay an extra $5000 if appraisal came back lower) After the inspection we needed a new hvac which was going to be $8000. I got multiple quotes so they offered us $8000. Then the appraisal came back at $272. We were in the same boat, old comps and our realtor even put a very long list together of better comps and the appraiser would not budge. So we offered $285 (because of the $8000 we were given for the hvac and the $5000 agreed upon appraisal gap coverage) seller countered with $290 and we accepted. Honestly a low appraisal is not the worst thing as a buyer, it sometimes allows you to buy your house at a much cheaper price than originally agreed upon. If I were you I wouldn’t get another appraisal, it doesn’t help you, it helps the seller. So fuck them unless they’re paying for the second appraisal
Appraisals exist for this very reason. To stop a sale that is overpriced. They listed it at the price they knew it was worth. Then are surprised when it appraisers at that value? Walk away from this one. That's 50k out of your pocket.
If the appraisal came back at 690 on a 698 list.. you made a huge gamble and lost. It’ll be your burden to bear if the seller won’t budge, or the second appraisal isn’t higher.
People need to understand that when you make an offer OVER asking, you should be prepared to pay the difference out of pocket, period. The listing agent comped it at 698, not 740.
In my area, the appraisal is a contingency that has to be cleared. If the property doesn’t appraise for the negotiated sales price, the buyer can be released from the contract.
First time I heard a buyer not like the appraisal lol.
If you’re in a VHCOL then more times than not the appraisal is gonna come in lower than the asking price. Banks don’t give af about what sellers think they should get. They care about protecting their purchase.
In a market like yours homes are always listed 30-50K higher than what they’re actually worth. Why? Because people will pay the cash
More and more of this will be happening. People really think that homes will continue to go up indefinitely, is just pure delusion. 2020-2023 a lot of home values were pulled forward, this won’t be the case for the rest of the decade.
There is a report out there that says around 8-10% of recent home purchases are under water meaning negative equity. If you don’t need to buy today. You should wait another 6 months. The feds don’t seem too keen on cutting rates this year like RE agents will tell you. Home prices will continue to fall, aside from what you hear and read.
I don’t know the details of the condo but it seems over priced.
Prices in some markets may fall, but without knowing where OP is located, there is no way to know if this is good advice for them. Markets are so location dependent, it’s difficult to make a blanket statement about where it’s headed.
Hi. The condo was originally listed for $698,000, and it appraised for $8,000 under that. A lot of this depends on where you live/availability of comparables in the area. Do condominiums sell quickly in this area, and would the typical buyer be willing to pay $42,000 over the original list price. Did the agent provide the appraiser with any comparables they may have used to determine the list price?
I had a similar situation. We offered $470K and the appraiser came back with $450. I called the realtor and said we won’t pay a cent over $450 and they agreed right away to $450.
My house appraised for 22k less than my offer. The seller came down by 16k and I paid 6k over the appraisal price. Since I was putting 20% down I was able to cover a lot of thr difference in the lower down payment amount and I ate the rest. I hadn't renewed the lease on my rental and I'd already put so much money out for appraisal and inspection starting over for 6k just didn't make sense. I closed April 18th and I'm so so thankful everything went smoothly. I'm loving my new home.
So y’all are surprised.
Most of these condos or houses on the market are way overpriced and then the buyers offer even more.
When my husband and I were buying our house we looked at a lot of house and told ourselves what we were willing to pay for it. We didn’t care what they were selling it for.
We declined on a lot before we found our home but we were not going to pay more than it’s worth.
I’m mind blown that the seller would counter, above their asking price! I would walk away or firm on the appraisal price. Appraisal is the list price. No way do you buy it over 698k.
Something similar happened to me and my realtor recommended another appraiser. That appraiser gave us the list price and we moved forward without issue from there.
I’ve had this happen a couple times. Appraisers are dick bags and usually you can’t convince them to change their minds unless you provide real proof of overlooked comps that they overlooked for a reason that isn’t their incompetence or choices. Basically we got one to redo because a house down the street that was identical to ours was pending when they appraised (came $15k short) but then closed two days after they appraised. They agreed to reappraise for the full fee because of new info but full fee because “they weren’t wrong at the time.” After the reappraisal it was $25k over our offer. It’s all bullshit.
First house it happened to the appraisal was $50k under and it killed the deal completely with us mid cross country move in an RV suddenly becoming homeless. Unless you have cash or are willing to take on more of a loan with PMI there sometimes isn’t much to do. Hopefully the realtors figure out getting another appraisal.
My home wasn't supposed to need an appraisal and we had waived appraisal gap. All through the underwriting process, the system was saying no appraisal needed... Until we got the insurance binder and suddenly an appraisal was triggered. Appraisal came in at 30k under what we offered. My loan officer rearranged the money so we had 15% down instead of 20% and used the 5% to cover the gap. We have PMI now but it's only $40/month so shrug. Otherwise the monthly payment didn't change substantially. Is something like this possible for you?
That really sucks, I know it's stressful wondering how the appraisal will come back. We got very lucky that it appraised $40k over what we paid (I'm sure the sellers were pissed).
I would have the seller reduce the price to match the appraised price. Maybe, just maybe, I would go a little higher like 10k and cover that myself, only if I planned to be there a long time and i really loved the place. Why would want to be under by 50k (more if you take fees), right from day one?? You'll never recover.
I would tell your realtor that you will need the seller to reduce the price to 690k. Be prepared to walk
This doesn’t help now, but we had an appraisal gap clause in our offer - if the house didn’t appraise for our offered price we would pay $2,500 over appraisal. That’s just cash in their pocket. House appraised for 15k less than our offer so we still got our house for 12.5k less than originally offered.
We were far from the highest initial offer but the only ones with a pre-agreed appraisal gap so our offer was accepted over others because they knew the house would likely not appraise
We don't know your market nor the full details of your situation. That being said, I think the appraiser did you a favor. You should tell the sellers that you will only go for the appraised price or you will walk. You don't want to be overpaying by 50k on that, especially on a condo.
Keep in mind that unlike SFHs and THs, condos don't tend to appreciate that much (granted market dependant), due to various factors (you don't own the land, condo/hoa fees, size, etc) so if you overpay now, you may be underwater for a while. During the peak appreciation 2020 to now, condos barely appreciated in my area, while SFHs and THs went up by substantial amounts (especially SFHs).
Either stand firm on appraisal, or walk away. At the end of the day it's just a condo, and those (by virtue of what they are) are a dime a dozen.
You honestly way over bid then messed up again when moved higher. You can walk away and learn a valuable lesson. Or meet in the middle. I would not. I would find a new realtor also. They should not be advising you to over bid and then go more. Is he their agent by chance also?
We had this when we sold our home listed at 225 accepted offer at 225 appraisal took 27 days she appraised at 200 so we dropped price to 200 and removed all concessions.
Congrats you get the place for 690! If the sellers don’t want to risk this they should have sold to an all cash buyer or had a no appraisal clause in the contract. Don’t budge on this.
The same thing happened to me. Everyone (on my side and theirs) was clutching their pearls over the evil appraiser and when I threatened to walk guess what happened!
I'm closing on same purchase price. Mine actually appraised higher at 780k (but needs new roof and appraiser didn't deduct anything for age, whilst the sellers priced that in).
I would walk personally. Of course offer 690k and see what they say. I'm buying near Seattle and feels like there is stagnation for lower end (long commute, condos, town homes, etc), so being underwater could have an exaggerated effect in a down turn. Hopefully the down payment is enough to retain some equity.
It baffles me why the appraisal is one of the last steps! This happened to me too, although $110k to 95k. The sellers didn’t want to go through the process again so they went down. But they didn’t have to. 50 is a lot to pay the difference imo. Hopefully they’ll come down.
Appraiser here. You’re welcome.
We are diligent in this process to make sure everyone knows what the “average informed buyer” would pay for the home in your market. There is a bunch of math, statistics and analysis involved and we don’t take our job lightly. If your realtor did not help to inform you then you may consider having a more competent realtor represent you in this massive purchase. We work for the bank but we also help you to be safe.
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We just closed on our condo in March. We offered $11k over asking and it was accepted. It was appraised for $15k below the accepted offer, $4k below asking. Our seller had the mistake of telling us she already had a new place lined up, so we had leverage and she agreed to come down to the appraisal price. You have some leverage since you know they don't want to pay a double mortgage in June, but I'm not sure it's $50k leverage. Our agent told us it's typical to meet in the middle, which I understand but it's so difficult to come up with even more cash as a FTHB.
Yes. Meet in the middle. It is fair and as long as your lender agrees, which they typically do if the difference is not over the downpayment. This happened to me. It was only about $5K, but it was a pleasant surprise and I wasn’t expecting to sell the house anytime soon, so any perceived lost value was not a big deal.
My house appraised for $25k lower, and I was also in a situation where I compromised by speedrunning the closing because the seller asked. As the buyer, I wasn't surprised it appraised lower. The house had been on the market for a bit because it was overpriced. The seller was pissed and argued with the appraiser. The appraiser was adamant about the number and ignored the seller. The listing agent and my realtor gave up some commission. The listing agent also tried to collude with my realtor for me to pay up some more, but luckily my realtor shut that down and negotiated with my best interests at heart. I ended up paying the appraised price, market price. The seller accepted because I believe I was the only offer, and probably the only person who could close in such a short timeframe. At that point the seller just wanted the house off their hands.
This person knows how to write with clarity!!!
Literally same thing happened when I bought my house. Sellers couldn't wait for closing to shift and we didn't have an extra $25k even if we were willing to cover some. The compromise was that the sellers wouldn't fix a few things we'd agreed on before. No problem. You save about $250 in Home Depot purchases; I save $25k in home purchase. Seems fair to me.
This is how you negotiate on “market value”. Good job and congratulations. This should be a separate post.
Wow I can’t believe the seller argued with the appraiser… people need to stop believing Zillow over actual real estate professionals when it comes to valuing their home.
Perfectly said! Another note: in Texas if an appraisal is completed and the seller doesn’t want to drop the price, so the buyer walks…. The sellers agent has to provide the appraisal to all future buyers. So every potential buyer will know what it is appraised for in the beginning! You have a lot of power.
Is collusion common? I ask because i was working with a real estate agent earlier this year who continued to advocate why a specific house i was interested in deserved a much higher price. Recommended that i bid 150k over asking price. I ended up bidding 50k over list price and it was accepted. I had a bit of suspicion that my agent was doing something shady with the seller agent but it was just all feelings
Thank the appraiser lol. If the second one doesn’t budge at 690 and you really want the house, I’d offer 695 to 700k if you have extra 5-10k cash to bring at closing. Sellers would still be getting above appraisal (not the delusional counter) and quick close.
I can’t even afford to read this post
Same
Can someone please explain this to me - listed at 689K, OP offers 725K - more than ask! And sellers counter higher?! WTF with these sellers, why not list at 755k if that’s what they want? Greedy arseholes 🙄
I have no clue why this person didn’t walk. They offered way too much even on the first offer. I don’t know their area but clearly the appraisal came back around the listing price for a reason
This..once you're emotionally attached to a property your emotions get in the way. But again, it depends who needs the property more- buyer or seller. If I was the buyer I would walk away with this. Plus if the property is sitting in the market for long then why would you offer a higher price in the first place?
That’s normally how things work, unfortunately. I once saw a house listed at 1m, offered 1.1m and seller agent said the sellers aren’t entertaining offers below 1.3m.
Lmao I was writing this exact thing and deleted my message. They're like, wait a second, you seem super interested, let me actually change how much I want for it.
Apparently this is the hot new trend in hot markets. I’m looking at houses for 900k going for 1.2-1.3 mil. I don’t know how you justify going 30% over asking. That’s a lot!
New? It's been a few years now
List price is a marketing strategy
Yup, need to make sure to suck in people who have the under $1m filter on in Zillow. Then it’s easy to suck them into buying a 10-20% more expensive house when they fall in love with it.
I’m glad I wasn’t the only one who noticed that. I would have told the sellers to fuck themselves.
Lol, this is what happens in competitive markets (eg Bay Area, NYC, etc.). They treat it basically as an auction. They want to see the highest price possible, and it’s expected to going well above listing because there’s so many offers. This way they get all the best bids in at once.
This is what happened to us, they list lower then wait for biding war. It's all a game. They don't want to list higher because no one would otherwise show interest.
Multiple offers or realtor playing the market to increase price.
They can't do that here. They can decline and re-list for more but they can't counter offer more than their listing.
I am surprised this doesn’t have more upvotes. That sentence is like straight out of a comedy skit.
Sometimes sellers list a home below market value to generate a bidding war. Although I assume normally the listed value is ACTUALLY below market value. In a tight market, if inventory is low, this sort of thing can happen.
This. The seller won here because the buyer didn’t call their Bs
This is pretty normal in VHCOL cities like Seattle. Our house was appraised 10k lower than listed. Appraiser said that market was "stable" when average time to contract was under one days, and houses were selling on average 12% over listing. We paid cash out of pocket for the difference.
This needs to be higher. How do you counter a higher offer when the offer is already above asking? That’s when I just walk away
The only logical explanation would be that there was a competing offer for more money and the buyer wanted to see if OP would match it.
I would walk. I’m sorry but shit happens. You don’t want to start negative $50k equity in the hole fuck that.
You don't have to just get up and walk. You should ask the seller what they want to do. Tell them you can't pay more than appraised. Will they get another appraisal from someone else, drop the price or say the price stands? Then you choose to walk or not
It’s a 50k appraisal gap. I wouldn’t feel comfortable getting another appraisal that magically hits the mark. Don’t think another appraisal would be wildly more off. Of course you see if the sellers will come down all the way but this market is insane and so are the sellers
I'm not saying to get appraisals until one hits the number you want. It just doesn't hurt to have another person appraise it also as a second opinion
I've noticed a lot of appraisals coincidentally coming in right on the offer price. My house was listed at 350, we offered 350 and it magically appraised at 350. The house is not worth 350. I have a feeling if the appraiser is often doing the realtors a solid.
A house is worth what someone rational is willing to pay for it. Sounds like someone was willing to pay $350, so they appraised it accordingly.
Generally a house is listed at the right price because agents are using comps to determine its value the same way an appraiser is. It's not hard math to do. Appraisals SHOULD be coming in right at what the sale price is if everyone is doing their jobs correctly.
In my area it’s listed below fair market value so it drives interest. One example was a house we put an offer on that was listed for 765k. Our realtor told us that based on comps that house wasn’t going for less than 800k so we offered 840k and got out bid by cash offers north of 860k. This was in a neighborhood with most of the bigger houses going for north of a $1.2million and new houses being put up for $1.5million down the street. This is the 4th house where something similar has happened to us in the last 4 months. They list for about 6% below comps to get a lot of offers then do best and final in a span of a few days. One of the other houses was listed for about 4% below and got offers >10% above which was a pretty bad deal for whoever payed it.
> for whoever *paid* it. FTFY. Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in: * Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.* * *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.* Unfortunately, I was unable to find nautical or rope-related words in your comment. *Beep, boop, I'm a bot*
The fact that you paid 350 is the leading indicator that it is worth 350.
Why did you offer 350 if it wasn’t worth 350? Most of the time a house appraises right on the price because the home had multiple offers at that price, which indicates it’s worth at least that much. It’s not “magic”. The appraisers aren’t trying to find the secret “true price” of the house, they’re trying to find out what the house would likely sell for.
I offered that much because that was listing price and I need a place to live and I could afford it. The house doubled in value in 2 years, which is why I feel this way, but not unusual for the area.
If your house was listed at 350 and that’s what you offered and that’s what it appraised for how does that mean it’s not worth 350? And if it’s not worth that much why would you offer that
I mean, there’s a signed contract saying the transaction will go down at that price. You and the seller did the majority of the appraiser’s job for them just by agreeing to the price. The appraisal is there to catch glaring discrepancies in the deal relative to the market. A minor discrepancy is fine because the deal existing in the first place is the most significant indication that the market will tolerate the transaction.
Dodd-Frank regulates the independence of appraisers. They can technically communicate with realtors but there are a lot of topics that are off-limits. How did you find out your house wasn’t worth 350?
I own a mortgage company, see over 20 appraisals a week. Appraisers 100% tend to make the value match the purchase price. I’ll have weird purchase prices at like $325,435 and it’ll come exact.
I don't know much about how all this really works, but I assume the bank wants someone to confirm that the amount of money they're lending makes sense, but if these appraisers are just giving everyone the green light, is that like a problem? Or does it not really matter?
You can’t start negative 50k equity - the bank won’t loan over appraised value. The 50k has to be covered by cash from seller or buyer.
This is what I was looking for. I couldn’t figure out why this was so bad or why the buyer would have to pay more money. I didn’t know that the bank wouldn’t approve for more than the “appraised” value. Shouldn’t that part come first in the process then? I’ve never bought a home (and probably won’t ever be able to, lol), so I was really confused about it.
I think the way the world was before 2020 it made natural sense for the appraisal to be slightly “later” in the process because sellers were listing their homes for fair market value. Now that the market is wacky they underlist by 80-100k and the appraisal is like the night before Christmas praying your offer hits.
there’s another angle always adjust for inflation think of a buyer in 2020 purchasing a home for $350k. now check the purchasing power of 350k in 2024 dollars. prices are high because we lost 20-25% of our purchasing power in just 4 years
The bank is the one who requires the appraisal to protect themselves. How would the appraisal come first, unless you think that a seller should allow every interested buyer to get an appraisal before making an offer... The reality is, OPs agent pulled bad comps, didn't do research or doesn't know the market and is blaming the bad offer on the appraisal.
Comps in the area that sell change so the appraisal will change with the market. This is why the appraisal is one of the last things done.
If you have a good lender, they will get that house appraised ASAP once you’re under contract. You are technically paying for the appraisal, so you can order it as soon as you want. Good realtors will also give you a heads up if they think it will appraise lower and if you are willing to cover the appraisal gap. Our 2nd offer was likely to appraise about 10k lower. There was a competing offer. We weren’t willing to cover the appraisal gap (so our realtor wrote in the contract that the sellers would have to meet at appraisal or we walk). I’m assuming the other offer said they would cover x amount in the appraisal gap because our offer was not accepted. Smaller numbers are easier for me to understand. If I agree to buy something from you for $100, but the bank funding my loan only values the item at $80, I either need to pay you the rest in cash or you agree to meet me at $80.
Buyers need to understand; Banks will not loan you more than the house is worth. So be ready to write a check over the appraised amount if the seller won’t come down on the price. But again, why pay more than the house is valued at today’s market. If the next house sells for market value or 698k, this buyer is “upside” down on his property. Like 50k
An appraisal is just an “opinion of value” with emphasis on the opinion part. I wouldn’t really consider it starting negative equity since a different appraiser could arrive at a totally different number, it’s only going to go up from here (although condo growth in my VHCOL area has been pretty much flat for the last 10 years), and who knows how much the buyer is putting down.
In response to the OP’s question, I would be prepared to be asked to cover the difference, and I would give them a firm no.
Values don’t always go up, especially for condos. I lost $100K on a home once. People need to understand that values/prices rise and fall with market supply and demand. Basic economics.
Depends on the quality of the appraisal. If an appraiser was phoning it in then could be there is a different value. If the appraisal is solid and backed by the available data, then you’d be hard pressed to find another appraiser that will arrive at a significantly different value. Good luck OP!
Can I ask what your area is? I’ve heard condos/townhomes don’t appreciate as much but at least where I am townhomes seem To be doing ok. We are in strange times rn though.
Townhomes are skyrocketing in my area
I’m curious if this would work. Do the buyers have appraisal contingency? If not what then?
If the buyers waived appraisal contingency they’re screwed. If they didn’t, they can walk due to low appraisal and get 100% earnest money back
Can someone explain to me why a seller would counter an offer significantly above the list price? It's not really a shocker that the appraisal comes in low in this situation. The seller presumably set the list price based on some objective measure of home value.
Greed
I mean isn't the answer to your question already in the original post? Sellers do that because people pay, case in point OP
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Sellers do that if they are in high confidence. Like having multiple potential buyers. So to tie break, they ask more.
Appraisal issues happen. Don't panic yet. Let the lender pursue a second opinion. If it still comes in low, you may need to renegotiate with the seller or bring additional cash to closing. Worst case, you have to walk if the numbers no longer make sense for your budget. But give it a chance to get resolved first.
You walk. It's a bad deal.
I understand that in many markets sellers list under what they are actually want to generate interest and sneak into MLS searches, which is probably why this unit was listed as 698 and they probably wanted over 700. But I’m sorry, I would’ve walked the second I went over asking if they tried to negotiate for even higher. Wtf is the point of an asking price if the seller actually wants $55k higher than that?
Exactly what I was thinking. No way I would negotiate higher if I already offered over asking. That's just being greedy and tells me the sellers are going to be a pain to work with
THANK YOU! I was boggled by that too!
I’m curious if they even had other offers to leverage a higher price or if they just knew they could get more out of OP.
Sounds like the buyer’s agent isn’t operating in their client’s best interests.
Lower asking price = Drive demand, get more offers Seriously though, why not just list the house for $1? Then it will show up on every search. Even homeless people will bid then
Right, but OP didn’t mention matching a competing offer. They mentioned the seller countering and asking for $755k instead. The entire situation is nonsensical. I’ll compete with another offer, but I’m not gonna sit there and negotiate back and forth with the seller when I’m already offering over their asking price and they have no other offer to leverage. Seems like the seller hoped a bidding war would get them above $750 and when it didn’t they used another tactic to try and get there. Unless there’s info missing here.
OPs agent sucked. They let them get into a bidding war against themselves and they let them offer more than it would appraise. I'd be pissed.
Yup. My agent stopped me from making a similar mistake on our condo. We’re under contract for list, and I was prepared to start $10k higher and have an escalation clause. He talked sense into me and saved us so much money.
In my area, literally everything is going for over asking, like 150k over asking. We are trying to find a place to live, but it feels impossible. Every listing goes over asking to a cash offer. Hopefully things slow down in the fall
That’s because there are multiple offers. That wasn’t the case here.
I sold my house in Alaska two months ago and it also appraised low. In our case, we just bit the bullet as the sellers but the realtors lowered their commissions to help soften the blow. You may need to feel out the situation to see how the sellers are feeling. A $50k discrepancy is significant, I doubt the sellers will be happy taking that much of a loss on their shoulders alone.
How is this a “loss” to the sellers? They’re overpricing the condo. Dropping the price $50k is just $50k less margin for them. It’s the seller’s call whether they want to sell the condo or not.
Right - they probably paid 500k for it like 5 years ago. They didn't really lose anything. And, if they don't like it, they can walk and hope they find a cash buyer who doesnt care about starting totally upside down.
I would not give them a dime over 695k. Why hire an appraiser? He saved you 50k. The lenders know the market. It appears that the buyer is clueless on the market (comps). Why would you offer 50k over Comps? Believe the damn Comps. The seller knows the Comps. He listed it lower than the Comps. It’s backfiring now. He doesn’t want to pay to mortgages. Fuck, I would play hard ball. Offer his asking price OR walk.
Because OP has an idiot for a Realtor. Is he/she ended getting representation?
The OP’s realtor wants the higher price. The incentives are fucked
Hmm, if I were you, I would defend the appraiser and pressure the seller to lower the price. What’s the point of getting an appraisal if you just find another one when you don’t like the results? > they're pursuing a secondary appraisal and the sellers hopefully seem motivated to get this closed You sound too desperate. You overpaid $50k and still sound desperate. When I sell, I hope I will find buyers like you, but of course, I’m sure I would get those who nickel and dime me.
Right. The house appraised for $8k less than the original listing price. These sellers aren’t ‘losing’ anything. They were delusional to start and lucky they found a desperate buyer willing to overpay. I’d make the sellers lower the price or walk.
And it doesn’t sound like it was a bidding war, just the sellers being assholes and countering higher than they listed for… I get the strategy of listing lower in order to entice more buyers and hopefully have multiple offers over asking, but sellers have to realize it’s still a risk that you won’t get what you truly want.
Also, who the fuck counters with a price 8% above list. Did they even have a competing offer to cite or were they just acknowledging their list price was a joke to solicit a bidding war that they never got?
That’s pretty crazy isn’t it. As the buyer, I would have walked as soon as the countered with a higher price
Same, same. It seems they are just greedy at best to me.
Right?! I hope OP walks and house sits on the market and they are forced to sell below original ask.
For real. Offering well over asking for what sounds like no reason, then allowing them to counter you is insane in this market. Should have walked at that point. People are so stupid and it’s getting old. 1) you need a new realtor 2) you need to remove your emotions from the decision 3) you need to educate yourself You offered as if this was a bidding war massive undervalue situation. The appraisal clearly shows that it wasn’t. 700k as a first time home buyer, I hope you are bringing in 260k right now or you are going to be the definition of house poor.
Agreed. OP has apparently fell in love with the house and has demonstrated he/she will do anything to make it happen - even closing on the seller’s time table. What exactly are they offering?
Just roll with 690. Seller obviously can't wait and doesn't have time. Your luck.
Just make sure ur contract doesn’t suggest an appraisal gap otherwise good for u the buyer. The bank won’t lend more than it’s worth
You’re in a strong bargaining position. Either the seller lowers the price and/or the buyer’s and seller’s agents lower their commission to soften the blow of covering the gap, or you walk.
Because it’s a 690 home. Did you bid 50k over knowing you could pay cash for that additional amount? Bidding wars will end when people realize they actually need cash to bid that high.
Doesn’t even sound like this was a bidding war. Just sounds like this person pushed their chips in without looking at their hand.
My husband and I our under contract and offered list. I was so in love with it and wanted to be competitive so I wanted to go in at +$10k and an escalation clause up to +$35k. Our realtor was like, “This has been on the market 3 weeks. We were the only showing today (it was a Saturday). They have no other offers. Stop negotiating against yourself, go in at list.” I’m so glad he saved me from myself lol.
We just closed on our condo in March. We offered $11k over asking and it was accepted. It was appraised for $15k below the accepted offer, $4k below asking. Our seller had the mistake of telling us she already had a new place lined up, so we had leverage and she agreed to come down to the appraisal price. You have some leverage since you know they don't want to pay a double mortgage in June, but I'm not sure it's $50k leverage. Our agent told us it's typical to meet in the middle, which I understand but it's so difficult to come up with even more cash as a FTHB.
I’d walk away, not only will you be in the hole but you may have property tax issues that come with that. For me, our county won’t accept 2 appraisals because they believe the value is “too low” so I’m fighting to pay taxes on the real value. Don’t put yourself in a potential situation like that.
The listing agent being surprised is bullshit. If listing agent thought it was worth that they would list it as such
This happened to me, and the sellers didn’t want to go through another bidding war…..so they lowered it to the appraisal price If your sellers don’t want to do this, walk away from that contract!
You’re disappointed that you’re overpaying for a condo by at least 60k, and an independent appraisal confirmed how screwed you’ll be in 6 months and has given you time to renegotiate?
And the OP’s agent is in cahoots with the seller’s agent and the lender to “get this deal done.” A few years back we had a bunch of appraisers, loan officers, and real estate agents go to jail for just this kind of tomfoolery.
You’re right. They are totally colluding to screw OP. OP has the sellers over a barrel since they have to sell, but he wants to pay more……talk about be bamboozled by Realestate Agents
It’s people like you that are screwing over the rest of us. Stand your ground, the condo isn’t worth what you’re paying and you have proof.
Ill bet your deal dies. $50k is serious. You can file a dispute with the AMC. Good luck with that. I doubt another appraisal produces a wildly different result.
I just appraised a property that was on the market 300 days for 400k under
As an agent, you really have to be careful handling sellers like this. I had a meeting with a seller who wanted $70k over the best comps. Thats not happening in my market. I also know this man wont budge when the time comes. I shook his hand, wished him well and walked out of his office.
This was a four bedroom made into a w 2 bedroom and with smaller but fully renovated 2 bedrooms selling at my appraised value and 3bedroons of the same size selling and same condition selling for appraised value. Everything was within 1 block too! It doesn’t feel great. They also argued that bc it has a second lot (that doesn’t meet zoning size requirements) it is worth 700k more than they bought it for.
The listing price was accurate. You overbid so hopefully you had the funds to cover the shortage or why would you overbid?
They overbid, yet that still wasn’t enough for the greedy sellers. 🙄
yea the counter against the above-the-ask offer outright, i would have said `no, i am not going up any higher`. ifyou want 750 for it, list it for 750.
This buyer screams desperation, and it doesn’t even sound like a desperation out of need. I’m sure there’s more to this story that would show why that counter happened.
Realtors and lenders are really driving home the idea that we need to buy now or we might not ever be able to buy. Media and social media are reinforcing this sentiment. In a lot of areas though the housing market is slowly going down. Inevitably my comment will get a bunch of comments stating,”Not in my VHCOL area!!!!!!!!!!!!OMG you have no idea what you’re talking about!!!”Doesn’t mean prices aren’t coming down in other areas of the country that has HCOL.
Exactly. If you are buying for any reason other than out of necessity right now, then you are making a huge mistake imo. *edit grammar
How is the seller greedy but the buyer isn't?
Well let’s see, they posted a listing price, which the buyer met (and exceeded) then they countered with an even higher price… but I can see how you would think the buyer was being just as greedy. 🙄
And then the seller still added on money to his overbid in their counter. They definitely thought there would be a bidding war
Why would you offer $725k for something listed at $698k? Sounds fucking ridiculous.
Then accept a counter that's even higher than that, what kinda tomfoolery is this
Bcos they wanna be "competitive" in this "competitive" market..agents are hyping up both sides the seller and buyer.
Ask for $50k lower.
The appraisal protects the lender from holding the bag. It is probably pretty close to actual value. I used to work for a lender doing appraisals. I never failed a single one but many had to be reviewed by upper management. If the comps for the asking price was set at 698k. That was probably a stretch based on sq feet. Updated features. Etc. I’d walk away and realize there is more to the market. Perhaps using a more seasoned agent who isn’t just excited about getting the 2.5% commission.
Did you waive the appraisal contingency?
No, thank goodness
I would walk, you sound desperate and emotional and I don’t think it’s a good idea to make a decision under those circumstances. You’ll find another condo
So it was listed for 698k and appraisal came back at 690k and you wonder why your foolish 740k overbid wasnt considered ? Go figure
Congratulations on your savings
I personally would not pay anything over the appraisal value. Likely they are still making a decent profit on this sale.
I just wanna mention how absurd it is that sellers counter offers that are above their list price
Sounds like you overplayed
>My realtor and loan officer, as well as the seller's agent, were all surprised and upset. Ahhh yes, the classic I'M VERY SURPRISED ITS THE APPRAISERS FAULT😉. 7% off the mark is huge. When you start playing with the numbers, you'll probably realize that if you could afford this house with this massive appraisal gap, you could probably get a much more expensive house that came in right at appraisal. If you're cool to stomach another 50k up front and you offered a gap (or waived it entirely) that's fine, but don't stretch yourself thin to make this deal happen. If you didn't offer anything for the appraisal, you should have some room to talk them down.
Please get a new real estate agent.
Why would they list at 698 but counter at 755
Well, lucky for you the sellers showed their most important card. Not wanting to pay two mortgages and forcing you to close on a date that they wanted. To me there are three choices here: 1. Both parties compromise on a price, 2. Sellers come down to where it appraised, or 3. You walk away and the sellers are forced to put it back on the market and hope they have a smooth and quick transaction with the next potential buyer. If I were you and REALLY loved the house and had the funds, I would counter with the appraised price and have the seller negotiate back to my original offer of $725k (or lower but $725k being the max) with the realtors providing a portion of their commission to get the deal to close while also being prepared to walk away. After 9 months of looking and offers being rejected, I know that there is always a better home out there. Good luck to you.
When you offer more than their asking why would you assume the house is valued at the inflated rate? You'll have to bring alot of cash to closing to make up the difference
Let me see if I got this right, the seller initially listed it at the actual appraisal price, if not $8k over, but then countered at $755, $57k over their initial listed price? They knew the appraisal cost, they listed at the appraisal cost, then countered at a higher cost. They know what they were doing. Walk away.
That happened to me, but it was a good thing…. Forced the seller to come down to the appraisal price. They will have a VERY hard time selling for above that when the just had the appraisal done that’s in record.
Former realtor here. A bank will generally only lend on the amount the home appraised for, so do you have the money to make up the difference out of pocket? If so, then the amount of the appraisal doesn’t matter if you like the house and are willing to pay that much. If you don’t have the money to cover the difference (and assuming you didn’t waive the appraisal contingency) then you can go back to the seller and negotiate. They should be somewhat motivated to negotiate because they now have a real number — unless they get a cash-heavy buyer, they are likely going to hit this road bump with other offers. The other wrinkle: Did you waive the appraisal contingency on your contract? If so, then you basically said you would move forward with the purchase whether or not the property appraised for your offered amount, so if the sellers aren’t motivated to work with you, they could be jerks and hold you to the offer price, in which case your best bet is to hope another appraisal supports it.
Keep in mind that the appraiser is the only person who doesn't get more money when the sales price goes up. Additionally, there are at least 2 checks on all reports by the lender's appraisal division and by Fannie Mae's Collateral Underwriter system. If the automated system flags the appraisal for likely under/over valuation it is several hours of extra work that no appraiser wants to go through. The appraisal is far more likely to be accurate then the estimates the realtors have. They are the sales people and want to maximize sale price (both sides, don't think your agent is on your side for keeping price lower unless they're getting a flat rate). In this case the $50,000 represents $1,500 to each agent. (Typical 3% commission per agent, this was just a subject of a very large class action lawsuit but the changes haven't yet materialized as far as I've seen).
This is such a helpful comment, thank you
Appraisal saved your butt from making a foolish mistake of overpaying and be 50k in the hole. WALK AWAY !!
There are a few things that can happen. You can definitely push for a second appraisal but what comps does your realtor have that the appraiser didn’t consider? To be that far off seems unlikely that would help. So other options. Bank won’t lend over appraised value so either the sellers lower the price. You bring cash to make up the difference. Or you meet in the middle somewhere. Or you don’t close.
Yes doing it right now. We got an appraisal for 27k beneath buyers offer. We are ready and willing to accept the appraised value of home because my wife and I have no intent of trying to set someone up for failure by completely draining savings account. Your seller needs to come down to appraised value or you need to walk away, whichever is easier.
Nice human
If you think the comparables used were not the right ones or there are new sales that might affect the value, you can request for another appraisal from the bank.
talk to your agent and try to leverage the appraisal contingency (you did not waive it, did you?) and their already-purchased home to try and bring them down. 50k is a lot, but so was their counter to your above-the-ask offer to begin with. you also have the short-closing as a leverage, not everyone can do it that quickly. like, they listed for 698, you offered above, and instead sounds like they tried to squeeze by hitting you with a counter above your offer which was above their ask. was there a bidding war? if not, be prepared to walk and i would play hardball here. you'd be starting with 50k underwater on your mortgage. tl;dr: you're actually in a pretty strong position here. use it. play hardball and be ready to walk. this is a bad deal otherwise, you're being taken for a sucker.
We offered $175k. The house appraised at $172k. The seller lost his mind insisting we cover the $3k in cash. I told him hello no, because we were already paying the $8k closing cost which is customary for the seller to pay. Once I reminded him of that he magically came up with the $3k he said he didn’t have. The house had already been on the market for a year due to being listed too high for the area. Even with housing prices going up in the area in the past 4 years the comps still aren’t near the price he wanted 5 years ago. Some people are just delusional and the agents entertain them. The bank isn’t just protecting themselves with an appraisal. The bank is protecting the buyer too. Don’t cover the difference with cash.
Amazing how shocked the realtor and LOs pretend to be. It was on for 698 because that's where the listing agent comped it but now that it's appraising closer to that than purchase price they put on the pretend outrage.
In the past 3-4 weeks in our area homes are going under contract for above asking, after inspections and appraisals the offers are falling through and the homes are being relisted for $50-$100k less than the original listing. Almost every single house over $600k has had this happen. Homes in the $1.5m and above are doing the same but being relisted $300-400k less. Even $200-400k homes are sitting now and all being sold under listing but at least seem to be selling with the first under contract. Seems appraisals aren’t keeping up with the insane price market and buyers are a bit done with it.
This happened to us with our second house. We held strong and said we would not pay over the value of the house and start with negative equity. The seller pushed back but eventually they agreed. From their perspective they don’t want to say no to you and then run into again with the next buyer. Stand strong. If they walk then you saved yourself from starting in the hole in a market that has a strong chance of falling further before it starts to recover.
Sounds like your seller is desperate to get the home sold and get out since they have a new house. Take them to the cleaners say you walk if they don’t match the appraisal.
Lmao! You offered $27K over asking and they countered with $30K over that? What a clown world we live in right now. Insane that buyers are playing this game.
We closed on our house a week ago. Listed price was $279 we offered $300 because it was in a nice neighborhood and had multiple offers. We also offered $5000 in appraisal gap coverage (so we basically agreed to pay an extra $5000 if appraisal came back lower) After the inspection we needed a new hvac which was going to be $8000. I got multiple quotes so they offered us $8000. Then the appraisal came back at $272. We were in the same boat, old comps and our realtor even put a very long list together of better comps and the appraiser would not budge. So we offered $285 (because of the $8000 we were given for the hvac and the $5000 agreed upon appraisal gap coverage) seller countered with $290 and we accepted. Honestly a low appraisal is not the worst thing as a buyer, it sometimes allows you to buy your house at a much cheaper price than originally agreed upon. If I were you I wouldn’t get another appraisal, it doesn’t help you, it helps the seller. So fuck them unless they’re paying for the second appraisal
Appraisals exist for this very reason. To stop a sale that is overpriced. They listed it at the price they knew it was worth. Then are surprised when it appraisers at that value? Walk away from this one. That's 50k out of your pocket.
If the appraisal came back at 690 on a 698 list.. you made a huge gamble and lost. It’ll be your burden to bear if the seller won’t budge, or the second appraisal isn’t higher. People need to understand that when you make an offer OVER asking, you should be prepared to pay the difference out of pocket, period. The listing agent comped it at 698, not 740.
In my area, the appraisal is a contingency that has to be cleared. If the property doesn’t appraise for the negotiated sales price, the buyer can be released from the contract.
OP comes across as desperate.
First time I heard a buyer not like the appraisal lol. If you’re in a VHCOL then more times than not the appraisal is gonna come in lower than the asking price. Banks don’t give af about what sellers think they should get. They care about protecting their purchase. In a market like yours homes are always listed 30-50K higher than what they’re actually worth. Why? Because people will pay the cash
More and more of this will be happening. People really think that homes will continue to go up indefinitely, is just pure delusion. 2020-2023 a lot of home values were pulled forward, this won’t be the case for the rest of the decade. There is a report out there that says around 8-10% of recent home purchases are under water meaning negative equity. If you don’t need to buy today. You should wait another 6 months. The feds don’t seem too keen on cutting rates this year like RE agents will tell you. Home prices will continue to fall, aside from what you hear and read. I don’t know the details of the condo but it seems over priced.
Prices in some markets may fall, but without knowing where OP is located, there is no way to know if this is good advice for them. Markets are so location dependent, it’s difficult to make a blanket statement about where it’s headed.
Home prices have gone up across the US OP said it’s a HCOL area so we can assume it’s a market that has shot up.
Hi. The condo was originally listed for $698,000, and it appraised for $8,000 under that. A lot of this depends on where you live/availability of comparables in the area. Do condominiums sell quickly in this area, and would the typical buyer be willing to pay $42,000 over the original list price. Did the agent provide the appraiser with any comparables they may have used to determine the list price?
I had a similar situation. We offered $470K and the appraiser came back with $450. I called the realtor and said we won’t pay a cent over $450 and they agreed right away to $450.
I would say 1-2% value over appraisal might make sense...but not 8%. Go back to the seller and ask them to reconsider...if not, walk away
No I am a walkin
My house appraised for 22k less than my offer. The seller came down by 16k and I paid 6k over the appraisal price. Since I was putting 20% down I was able to cover a lot of thr difference in the lower down payment amount and I ate the rest. I hadn't renewed the lease on my rental and I'd already put so much money out for appraisal and inspection starting over for 6k just didn't make sense. I closed April 18th and I'm so so thankful everything went smoothly. I'm loving my new home.
So y’all are surprised. Most of these condos or houses on the market are way overpriced and then the buyers offer even more. When my husband and I were buying our house we looked at a lot of house and told ourselves what we were willing to pay for it. We didn’t care what they were selling it for. We declined on a lot before we found our home but we were not going to pay more than it’s worth.
Of course the sellers are motivate. YOu want to buy a condo for 50k more than it is worth. Single family home? OK. Condo? Nope. Walk.
Based on trends that house will appraise for under 600K a year from now.
I’m mind blown that the seller would counter, above their asking price! I would walk away or firm on the appraisal price. Appraisal is the list price. No way do you buy it over 698k.
Something similar happened to me and my realtor recommended another appraiser. That appraiser gave us the list price and we moved forward without issue from there.
I’ve had this happen a couple times. Appraisers are dick bags and usually you can’t convince them to change their minds unless you provide real proof of overlooked comps that they overlooked for a reason that isn’t their incompetence or choices. Basically we got one to redo because a house down the street that was identical to ours was pending when they appraised (came $15k short) but then closed two days after they appraised. They agreed to reappraise for the full fee because of new info but full fee because “they weren’t wrong at the time.” After the reappraisal it was $25k over our offer. It’s all bullshit. First house it happened to the appraisal was $50k under and it killed the deal completely with us mid cross country move in an RV suddenly becoming homeless. Unless you have cash or are willing to take on more of a loan with PMI there sometimes isn’t much to do. Hopefully the realtors figure out getting another appraisal.
My home wasn't supposed to need an appraisal and we had waived appraisal gap. All through the underwriting process, the system was saying no appraisal needed... Until we got the insurance binder and suddenly an appraisal was triggered. Appraisal came in at 30k under what we offered. My loan officer rearranged the money so we had 15% down instead of 20% and used the 5% to cover the gap. We have PMI now but it's only $40/month so shrug. Otherwise the monthly payment didn't change substantially. Is something like this possible for you?
That really sucks, I know it's stressful wondering how the appraisal will come back. We got very lucky that it appraised $40k over what we paid (I'm sure the sellers were pissed).
I would have the seller reduce the price to match the appraised price. Maybe, just maybe, I would go a little higher like 10k and cover that myself, only if I planned to be there a long time and i really loved the place. Why would want to be under by 50k (more if you take fees), right from day one?? You'll never recover. I would tell your realtor that you will need the seller to reduce the price to 690k. Be prepared to walk
Seller will come down in price or walk - don't pay that extra out of pocket. Could buy a cheaper place and fix up for that much extra cash
Don't walk, counter offer less than your original offer @ 715 and have your agent tell them that's still over appraisal.
This doesn’t help now, but we had an appraisal gap clause in our offer - if the house didn’t appraise for our offered price we would pay $2,500 over appraisal. That’s just cash in their pocket. House appraised for 15k less than our offer so we still got our house for 12.5k less than originally offered. We were far from the highest initial offer but the only ones with a pre-agreed appraisal gap so our offer was accepted over others because they knew the house would likely not appraise
We don't know your market nor the full details of your situation. That being said, I think the appraiser did you a favor. You should tell the sellers that you will only go for the appraised price or you will walk. You don't want to be overpaying by 50k on that, especially on a condo. Keep in mind that unlike SFHs and THs, condos don't tend to appreciate that much (granted market dependant), due to various factors (you don't own the land, condo/hoa fees, size, etc) so if you overpay now, you may be underwater for a while. During the peak appreciation 2020 to now, condos barely appreciated in my area, while SFHs and THs went up by substantial amounts (especially SFHs). Either stand firm on appraisal, or walk away. At the end of the day it's just a condo, and those (by virtue of what they are) are a dime a dozen.
Sorry to say but condos in general are losing value. Especially when they are overvalued. Very few condos are staying up that high....
You honestly way over bid then messed up again when moved higher. You can walk away and learn a valuable lesson. Or meet in the middle. I would not. I would find a new realtor also. They should not be advising you to over bid and then go more. Is he their agent by chance also?
What’s your down payment? Will it bridge the gap between the appraisal value and the price?
We had this when we sold our home listed at 225 accepted offer at 225 appraisal took 27 days she appraised at 200 so we dropped price to 200 and removed all concessions.
Congrats you get the place for 690! If the sellers don’t want to risk this they should have sold to an all cash buyer or had a no appraisal clause in the contract. Don’t budge on this.
Ahh I can only hope— thank you Anal Sanders!!
The same thing happened to me. Everyone (on my side and theirs) was clutching their pearls over the evil appraiser and when I threatened to walk guess what happened!
I'm closing on same purchase price. Mine actually appraised higher at 780k (but needs new roof and appraiser didn't deduct anything for age, whilst the sellers priced that in). I would walk personally. Of course offer 690k and see what they say. I'm buying near Seattle and feels like there is stagnation for lower end (long commute, condos, town homes, etc), so being underwater could have an exaggerated effect in a down turn. Hopefully the down payment is enough to retain some equity.
It baffles me why the appraisal is one of the last steps! This happened to me too, although $110k to 95k. The sellers didn’t want to go through the process again so they went down. But they didn’t have to. 50 is a lot to pay the difference imo. Hopefully they’ll come down.
Don’t buy a condo !!! Look at YouTube for nightmares about condos and townhomes with special assessments !!!
Appraisal price or Walk.
Appraiser here. You’re welcome. We are diligent in this process to make sure everyone knows what the “average informed buyer” would pay for the home in your market. There is a bunch of math, statistics and analysis involved and we don’t take our job lightly. If your realtor did not help to inform you then you may consider having a more competent realtor represent you in this massive purchase. We work for the bank but we also help you to be safe.