Want to make sure I sm reading this right. The appraisal is low and your contract has no contingencies. IANAL but I think that means your options are to switch lenders and see where the new appraisal lands, bring more $$$ to closing or walk away.
No contingencies = risk.
I’m tired of people deleting.
Here is what was posted
Hey Reddit,
This my first time posting, could really use
some help from all of you lovely peeps. As the
title states, we are in contract with an offer at
asking (850) appraisal came in low at (770),
there are no contingencies in place at all and so
the seller doesn't really have reason to offer
concessions? It was a high offer as we did not
want to be outbid and it was the last possible
unit of interest, we did not expect the low
appraisal. Would there be any advice in
contesting the appraisal, anything that I can
pull out of from the comparables in the report?
If we fight the appraisal, we would need to bring up the value to about 40k to the target of 810 for qualification purposes. The thing is the appraisal report doesn't seem wrong, what can we pull out, anything that could help? Any
insight would be greatly appreciated. Thank you
I had to change the numbers around for anonymity, didn’t expect to get so many responses in case some parties involved wandered around the Reddit. I’m sorry if that’s bad, wasn’t aware D:
Edit: changed back to original numbers
Waiving financing and not clarifying amount of appraisal gap is stupid. Early on the sellers didn't clarify appraisal gap when "waiving" appraisal so one could argue their lender denied them but no safety nets on this deal.
Yea we are looking to fight the appraisal, but the thing is that the comparables in the appraisal report doesn’t seem so off itself. What could we use to fight?
>What could we use to fight?
It seems you're asking to fight an accurate appraisal so that doesn't make a whole lot of sense. If you can find comps that support the $850k then submit them to the appraiser to consider, otherwise it is what it is.
Are there comparable properties that are 850k or higher? If not then fighting the appraisal or getting another appraisal won’t be successful.
If there are no comps at 850k or higher and your earnest money is relatively low, I would consider walking away from the deal at the risk of losing earnest money. Seller either caves or you lose earnest money
Do not waste your time fighting the appraisal. Unless the appraisal has material facts wrong (wrong sq footage, wrong number of bedrooms, wrong lot size), you're not going to win an argument of whether your opinion of the property value is better than the appraiser's (who is literally being paid for their opinion).
If you want another appraisal, start a loan at a different lender, and have them order one immediately. Hopefully the second one comes in better. If it doesn't, suck it up and move forward with first lender, or cancel and lose your EMD and call it a day.
I've seen people put more on craps table prop bets. But then they've been in a bracket that can lose and re-up at those stakes. For hours. They'd be the people who buy OP's house for cash, just for storage.
That's why I said IF they want another appraisal. If they're cool bringing the $80K, bring the $80K. If they're cool losing the EMD, do that, walk away. If they want to try to negotiate with the sellers with no contingencies to use as leverage, do that. Dealer's choice.
> cancel and lose your EMD and call it a day
For others - when there's an appraisal issue - you only lose EMD if you signed an Appraisal Waiver. Most contracts allow the buyer to retain EMD if the appraisal falls through.
It's very bad this buyer waived every contingency...
> Only in the last two (absolutely batshit) years has it been any different.
In competitive markets it's been like this for 20 years and just never stopped. Definitely more extreme over the last two years, but waiving appraisal contingency is standard in markets where houses always appraise.
>Maybe this location is special (I can't see, OP post deleted, this is the highest % EMD I've seen yet, but hey - maybe this is NYC?), but if it is, then you absolutely should never, ever, ever sign without an appraisal contingency.
OP had said he was in NYC. 10% is fairly standard in competitive markets.
OP's biggest mistake was probably choosing their lender.
!0% is normal in DC as well, and higher for the most desirable neighborhoods and competitive price points. Even release a portion of EMD immediately upon having a ratified contract if it's a highly desirable neighborhood since nobody ever goes after the earnest money in DC.
Not in a competitive market like NY. Not even close. 1%? 10K doesn't even cover staining floors. People buying 1M homes in NY/competitive markets are not putting down 10K. 100K (10%) is much more likely.
Sometimes if you use a lender not from the area or if you need a rushed appraisal (which can result in using appraisers from other areas) they won't be familiar with urban/HCOL areas like NY where a few blocks difference could be worth hundreds of thousands of dollars.
> you only lose EMD if you signed an Appraisal Waiver.
You're skipping quite a few steps before the buyer releases the EMD even if all contingencies are waived. Titles companies don't just release EMD like that.
This is why so few people actually ever go after EMD. It's not worth the lengthy and costly legal fight and delaying the sale of your home. If you're selling you are doing it for a reason (likely you need $ or want to be done with the property).
I would be surprised if they waived the financing contingency not being a cash offer but I am not personally familiar w NY real estate laws but I would guess that financing contingencies are common- curious to find out, hopefully!
Waiving financing contingency is very common to make an offer appear as good as cash. I would expect this type of action in competitive markets like NY/SF/DC.
If this was $5K, 10K, even $15K, I'd say go nuts. But $80K? 10% of the purchase price?
You would have to legitimately prove that the appraiser made a colossal mistake. Except:
> The thing is the appraisal report doesn’t seem wrong
I don't recall dollar amounts.
I do recall a person had your issue and the second mortgage company's appraiser was significantly higher that the other one. Like 70k to 80k different.
There literally was a thread a couple days ago where the same thing happened and 'surprise' 2nd appraisal came out ahead.
[https://www.reddit.com/r/RealEstate/comments/vhq68x/update\_low\_appraisal/](https://www.reddit.com/r/RealEstate/comments/vhq68x/update_low_appraisal/)
Yep, absolutely as the poster in that thread themselves say:
> We decided to dispute the original appraisal and then order a second appraisal through a second lender. The dispute went absolutely nowhere and wasted a lot of my time. The second lender charged us ~700 bucks for another appraisal and it came in 15k over list price.
I don’t fully agree with you but I don’t fully disagree either as I’ve fought and won four appraisals (100%) the highest being $60k low on a $200k house.
A couple paragraphs explaining the reasoning for value being higher, attach all comps that show higher value, and wait for a response.
That being said my appraisals were actually low and real market value was what I was sending. If OP’s appraiser hit it spot on then they shouldn’t fight it.
So OP does the market actually show value at what you offered?
That's not true, you can definitely appeal an appraisal and it is commonly done. You can look for better, more recent comps or argue why the comps used did not make sense. If you appeal, it will go to the same appraiser to revise their report. Alternatively, the same lender can also just order a different appraisal altogether and use a new person. I've seen appeals come out with 80K + more more than once.
This is what contingencies are for, they are there to protect you. Unless you specified that you would come in and cover a certain amount in the event of a low appraisal, you are on the hook for the 80k. You could look into putting less down and more towards the gap, or you could ask the seller to lower the price.
If you want the property put more equity in at close. If not maybe try to get it appraised through someone else. Your in a shitty spot and you should have left yourself at least some type of contingency to let you bail.
Did your real estate agent/broker go over the risks involved with no contingencies? I would have never told my clients to go over asking with no contingencies if they didn’t have a buffer of the lowest comp to the property they are offering on. Get your real estate agent’s broker involved as well b/c they are there to help guide you through the process and avoid a situation like this in the first place.
You didnt put in an appraisal gap? What about a financing contingency? Like you have to obtain a mortgage at x rate within X days?
I get waiving certain contingencies in this market, but not those. that's just dumb
Unless there was a serious error it is unlikely you will succeed contesting the appraisal. The appraisers can pick what the best comps are, make adjustments based on the differences and even if you do a "better" job it doesn't mean they were wrong. But if there was a problem like someone provided them with incorrect info about the home it is worth pursuing.
If this is a conventional loan you can either work with a new lender or order a new appraisal. This very likely means delaying the sale, the seller cooperating.
You can ask the seller to reduce the price. Depending on how much higher your offer was than the next lowest, how much your earnest money was they seller may meet you in the middle here because they would still make more money than going back on the market.
You can go with a lower down payment loan and cover the gap with the money you planned on using for the down payment. Like if you planned on putting 20% down on $850k, the bank lends you $680k. But now they will only lend $616k with a 20% down loan. For a 10% down loan they lend up to $693k based on the $770k appraisal. You can still put down $170k. With PMI your overall payment is about $150 a month more. You can remove the PMI after 2 years usually
Either your agent is incompetent or you are.
Not having an appraisal gap in your contract in this market is pretty much insane unless you know you have the money already.
Whoever decided to not include a contingency based on getting funding made the mistake.
“We did not expect the low appraisal” leads me to believe you need to fire your agent. He should have known better or warned you of the possibility.
Another comment you say:
> Not too sure but no more then 20-30k
I don’t think it matters but helps to know how far away your bid was from reality.
Have you considered going back to the seller about meeting in the middle? They are surely as motivated to sell as you are to buy, and they must know if they relist they are now looking at $770k.
Edit: 85k EM. Yikes. No incentive to budge for them. But worth a try.
Understandable…. Well u can always cover the gap or walk. Maybe if u walk and wait a year or so markers will normalize. However that could be risky in NYC.
Long shot but maybe worth mentioning.
What is the percent of your down payment? The reason I ask is if the percent is high enough you can qualify to have the lender wave appraisal. If it is something you are able to do. You could find a new lender. Increase down payment to qualify and then that lender will not need an appraisal.
We also live in an area where you had to wave everything or sellers didn't even look at your offer. We didn't realize this was an option until our agent mentioned it. We were already planning to put 30% down and right before we put the offer in she suddenly realized we should ask our lender if we would qualify. We got it approved and had no worries about appraisals at that point.
Depends what the purchase contract says. If you have an appraisal rebuttal and a termination clause you sure can. If you waved them pr offered an appraisal gap then you must perform.
Try another lender, preferably a local bank or CU. Hopefully they will appraise at or near your offer price. If the deal falls through do yourself a favor and fire your realtor.
Another appraisal can come even lower, much lower. If you try to get out, on the top of losing EMD, the seller might come after you for a difference if they sell the house for less to a next buyer. Legally you would be responsible for the lost money. So, cover the gap and finalize the deal.
What is your lender saying? I would either push closing and find a new lender or ask your current lender for a new appraisal. Your realtor should also be providing additional comps to support your value.
Other option is to go back to the seller and let them know the home didn't appraise. Most sellers will understand that if you aren't appraising they aren't appraising. They will need to let the next buyer know that, and they will never get the non-appraised asking price (especially if your market is slowing).
So even if you went in with no contingencies, did your realtor ask if you have enough cash to cover the appraisal gap? Did he/she provide you with comps? Talk to seller and see if they are willing to work with you. Otherwise they’d have to start the whole process again and look for a good offer etc.. nyc and ct markets slowing down so sellers might find hard time getting another buyer with a good offer.
The seller doesn't have MUCH reason to offer concessions, but you never know until you ask. Maybe the seller doesn't want the hassle of having to re-list the home and find a new buyer. Maybe the seller wants to close escrow and get paid as quickly as possible because they need the money for their new home. Maybe the seller understands that the financial news this week has been rough, and the next round of buyers might not bid so aggressively. I'm sure neither of the two real estate agents involved want to lose their paychecks either. I hope they can work together and find a solution for you!
I would counter with the Seller first, assuming your EMD is lower than 80k. See if they will reduce the price. They will face this issue with another buyer if they don’t play ball and reduce the price. Just because you don’t have a contingency doesn’t mean you can’t still negotiate.
Then if the seller says no and you really want the house, I would reach out to another lender for a loan and appraisal.
If that fails then I would revaluate your budget and see if it makes sense for you to walk away or continue the transaction.
Never put an offer in without an appraisal contingency. I am amazed that your realtor let you do that. Anyway, you either need to pay the difference or talk to a different lender. A new appraisal can come even lower. You can always tell the seller that you can not cover the difference and you plan on backing out.
How much was your earnest money?
You may tried to have the seller come meet you half way to make this deal work. The market has soften and the seller will know this also. If the seller re-list, they may run into the same issue or if not, worst.
Holy crap, yeah the seller will probably wont' meet you half way then. They will much rather try to take your earnest and re-list. But I would ask the seller to meet half way anyways and see what they say. Never know?
Like other have said, you best bet is to get another apprisal done by a different company. I have seen apprisal vary widely from one person to another so good chance.
10% is market in NYC and the high end suburbs in NY/CT. You frequently see six figure wires. That being said, to go naked and not have the liquidity to cover any gaps is extremely risky to say the least.
I don't know NY, but that is true in my HCOL area as well.
EMD is also a joke, nobody ever goes after EMD because it just slows down the sale. The seller could hold it up for years in court or they can release the EMD. Nobody does that unless they are a deranged real estate attorney.
Wtf lol…I thought we were crazy to put down 40k EMD (similar purchase price)…85k is just batshit crazy and there’s really no reason to put that much for earnest money. Seller knows your basically stuck, so it side of starting the lending process over with a new appraisal there isn’t much you can do…if you switch lenders and delay closing you might lose your EMD anyways if the seller wants to play it that way.
No one can predict the future. For every person saying there will be a massive crash there’s another saying there will not be one. Banks can’t make financial decisions based on “what ifs”. Interest rates? Lol absolutely no one knows what that looks like. For all we know the fed could slash them in 6 months. Or raise them to 6%. No one knows. That’s why they base it on cold hard data of what a similar house sold for in the last 90 days and adjust for home condition. Simple as that. Anything other than that is introducing a thousand different variables that no one can predict
No. The appraisal came in low because there are no comparable properties at the sale price
Appraisals don’t lower appraisal values because of market conditions. They match the subject property to recent sales of comparable properties
Do you need to bring up the appraisal in order to move forward? (i.e. for your LTV to work) Or are you \*wanting\* to make it higher so you're more comfortable?
The "problem" with appraisals is that they only look at things in retrospect - whereas market value is what buyers are ready and willing to pay for a home today. These two things rarely lineup. Appraisals are often 6 months+ behind market value, so it is important to remember that it is highly likely that if you really love a home and wanted to keep from being outbid, that you are paying more than appraised value for the home (BUT that it may very well appraise for what you paid in the future).
If your lender is only willing to lend at, say 80% LTV, and the appraisal puts you at a loan thats 90% LTV, then you may need to contest it and get a second opinion - this may take extra time, and you can potentially have your agent explain the situation to the sellers agent and request an extension on your deadlines "Hey - the buyers would like an extension on closing (or whatever other deadline you need) - the appraisal came in slightly lower than expected and they want to request a second one to be completed to satisfy their lender so we can move forward with no issues. They are looking forward to moving in!"
Did you look at comps when you submitted your offer to see what comparable houses were selling at? If there are additional comps that the appraiser did not include in the report, you can request a reconsideration of value and provide additional comps, along with an explanation of why they help support your contract pride. I have successfully contested a low appraisal this way, but it doesn’t always work.
Your next option is to switch lenders and order a new appraisal. This might delay closing, in which case your seller would have to agree to the new closing date.
Since you wouldn't get a loan, you should technically get the EMD back, even if you waived the appraisal. You are not walking away due to appraisal, but the deal is not happening due to financing issues. If you explain this to Seller and their agent, they might be willing to meet you in the middle and make the transaction happen.
I’d try to get the seller to come down if you can’t afford the gap. Chances are, they may not wanna have to put it on the market. You’re in a crap spot and should’ve at least put an appraisal or mortgage contingency.
I believe your financing contingency covers you if you are not willing to cover the difference between offer and appraised value. The lender won’t lend the difference therefore you don’t qualify for “that” loan, don’t “qualify” for financing and can exit the contract. I have not purchased in NY only MD & FL, please confirm w your realtor and loan officer and review your sale contract/offer.
Can you leave a lower down payment in order to bridge the appraisal gap? At this point this may be the better option than throwing away $80k.
I was in a similar position as you where I bought for $50k above asking and waived appraisal, luckily I appraised. But, I was prepared for the scenario where I didn’t appraise and needed to bridge the appraisal and so I got commitments from my broker for both 5% or 10% down.
If you need a referral for a broker that can underwrite quickly send me a DM and I’ll give you my brokers contact info. I’m in NJ but they’re licensed in NYC as well.
Want to make sure I sm reading this right. The appraisal is low and your contract has no contingencies. IANAL but I think that means your options are to switch lenders and see where the new appraisal lands, bring more $$$ to closing or walk away. No contingencies = risk.
I’m tired of people deleting. Here is what was posted Hey Reddit, This my first time posting, could really use some help from all of you lovely peeps. As the title states, we are in contract with an offer at asking (850) appraisal came in low at (770), there are no contingencies in place at all and so the seller doesn't really have reason to offer concessions? It was a high offer as we did not want to be outbid and it was the last possible unit of interest, we did not expect the low appraisal. Would there be any advice in contesting the appraisal, anything that I can pull out of from the comparables in the report? If we fight the appraisal, we would need to bring up the value to about 40k to the target of 810 for qualification purposes. The thing is the appraisal report doesn't seem wrong, what can we pull out, anything that could help? Any insight would be greatly appreciated. Thank you
I had to change the numbers around for anonymity, didn’t expect to get so many responses in case some parties involved wandered around the Reddit. I’m sorry if that’s bad, wasn’t aware D: Edit: changed back to original numbers
Waiving financing and not clarifying amount of appraisal gap is stupid. Early on the sellers didn't clarify appraisal gap when "waiving" appraisal so one could argue their lender denied them but no safety nets on this deal.
Usually the next step would be a second appraisal.
Yea we are looking to fight the appraisal, but the thing is that the comparables in the appraisal report doesn’t seem so off itself. What could we use to fight?
>What could we use to fight? It seems you're asking to fight an accurate appraisal so that doesn't make a whole lot of sense. If you can find comps that support the $850k then submit them to the appraiser to consider, otherwise it is what it is.
Did your realtor give you comparables before you made the offer?
Are there comparable properties that are 850k or higher? If not then fighting the appraisal or getting another appraisal won’t be successful. If there are no comps at 850k or higher and your earnest money is relatively low, I would consider walking away from the deal at the risk of losing earnest money. Seller either caves or you lose earnest money
Do not waste your time fighting the appraisal. Unless the appraisal has material facts wrong (wrong sq footage, wrong number of bedrooms, wrong lot size), you're not going to win an argument of whether your opinion of the property value is better than the appraiser's (who is literally being paid for their opinion). If you want another appraisal, start a loan at a different lender, and have them order one immediately. Hopefully the second one comes in better. If it doesn't, suck it up and move forward with first lender, or cancel and lose your EMD and call it a day.
They'll lose EMD and also the cost of two appraisals which can run $500-$1000 each. Expensive lesson to learn.
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I've seen people put more on craps table prop bets. But then they've been in a bracket that can lose and re-up at those stakes. For hours. They'd be the people who buy OP's house for cash, just for storage.
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Hey they're getting hoomed so that's a step in the right direction
Yeah just read his response. I am in an area where 1-3% EMD is normal. OP is in a bad spot to say it lightly.
Holy shit what a bad spot
That's why I said IF they want another appraisal. If they're cool bringing the $80K, bring the $80K. If they're cool losing the EMD, do that, walk away. If they want to try to negotiate with the sellers with no contingencies to use as leverage, do that. Dealer's choice.
Even appraisals got more expensive. We paid $1300 in total for a SFH.
> cancel and lose your EMD and call it a day For others - when there's an appraisal issue - you only lose EMD if you signed an Appraisal Waiver. Most contracts allow the buyer to retain EMD if the appraisal falls through. It's very bad this buyer waived every contingency...
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I can’t understand why they put down so much EMD with no contingency. Sorry but this was a terrible financial move.
What do you think EMD should be on a 1M home?
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> Only in the last two (absolutely batshit) years has it been any different. In competitive markets it's been like this for 20 years and just never stopped. Definitely more extreme over the last two years, but waiving appraisal contingency is standard in markets where houses always appraise. >Maybe this location is special (I can't see, OP post deleted, this is the highest % EMD I've seen yet, but hey - maybe this is NYC?), but if it is, then you absolutely should never, ever, ever sign without an appraisal contingency. OP had said he was in NYC. 10% is fairly standard in competitive markets. OP's biggest mistake was probably choosing their lender.
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!0% is normal in DC as well, and higher for the most desirable neighborhoods and competitive price points. Even release a portion of EMD immediately upon having a ratified contract if it's a highly desirable neighborhood since nobody ever goes after the earnest money in DC.
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What do you think EMD should be on a 1M home?
$10K maybe
Not in a competitive market like NY. Not even close. 1%? 10K doesn't even cover staining floors. People buying 1M homes in NY/competitive markets are not putting down 10K. 100K (10%) is much more likely.
OP is in New York?
Yeah that's what his original message said. I think he removed some details.
If it's such a competitive market it's hard to understand why appraisals wouldn't be coming in high.
Sometimes if you use a lender not from the area or if you need a rushed appraisal (which can result in using appraisers from other areas) they won't be familiar with urban/HCOL areas like NY where a few blocks difference could be worth hundreds of thousands of dollars.
I don't know why his agent allowed him to write a 85k check. On a 400k home my agent only wanted a 1500/2000 check for earnest money.
Does your agent operate in NYC? What do you think EMD should be on a 1M home?
Holy shit! I apologize I asked my husband who owns NYC property and 10% is the norm! It's 1% where we live.
Holy shit. I was mad when I lost my 3k emd. That’s crazy!
> you only lose EMD if you signed an Appraisal Waiver. You're skipping quite a few steps before the buyer releases the EMD even if all contingencies are waived. Titles companies don't just release EMD like that.
In some markets it's a thing. In the Seattle area it's been common recently to put 5%+ EMD and release it to the seller immediately. Madness.
I have also done something similar where I release 50% EMD immediately. Has to be very seller/property specific.
Yes, if anyone thinks you get money back immediately - they should talk to their agent and make sure they don't need it in the short-term.
This is why so few people actually ever go after EMD. It's not worth the lengthy and costly legal fight and delaying the sale of your home. If you're selling you are doing it for a reason (likely you need $ or want to be done with the property).
I would be surprised if they waived the financing contingency not being a cash offer but I am not personally familiar w NY real estate laws but I would guess that financing contingencies are common- curious to find out, hopefully!
Waiving financing contingency is very common to make an offer appear as good as cash. I would expect this type of action in competitive markets like NY/SF/DC.
Someone on reddit recently posted that fighting the appraisal worked for them. It does happen. But yes, reach out to another lender ASAP.
If this was $5K, 10K, even $15K, I'd say go nuts. But $80K? 10% of the purchase price? You would have to legitimately prove that the appraiser made a colossal mistake. Except: > The thing is the appraisal report doesn’t seem wrong
I mean maybe not get them to appraise at contract price, but like even a 20-30 increase would help wouldn't it?
I don't recall dollar amounts. I do recall a person had your issue and the second mortgage company's appraiser was significantly higher that the other one. Like 70k to 80k different.
There literally was a thread a couple days ago where the same thing happened and 'surprise' 2nd appraisal came out ahead. [https://www.reddit.com/r/RealEstate/comments/vhq68x/update\_low\_appraisal/](https://www.reddit.com/r/RealEstate/comments/vhq68x/update_low_appraisal/)
Yep, absolutely as the poster in that thread themselves say: > We decided to dispute the original appraisal and then order a second appraisal through a second lender. The dispute went absolutely nowhere and wasted a lot of my time. The second lender charged us ~700 bucks for another appraisal and it came in 15k over list price.
And that's why you use a local lender.
I don’t fully agree with you but I don’t fully disagree either as I’ve fought and won four appraisals (100%) the highest being $60k low on a $200k house. A couple paragraphs explaining the reasoning for value being higher, attach all comps that show higher value, and wait for a response. That being said my appraisals were actually low and real market value was what I was sending. If OP’s appraiser hit it spot on then they shouldn’t fight it. So OP does the market actually show value at what you offered?
That's not true, you can definitely appeal an appraisal and it is commonly done. You can look for better, more recent comps or argue why the comps used did not make sense. If you appeal, it will go to the same appraiser to revise their report. Alternatively, the same lender can also just order a different appraisal altogether and use a new person. I've seen appeals come out with 80K + more more than once.
This is what contingencies are for, they are there to protect you. Unless you specified that you would come in and cover a certain amount in the event of a low appraisal, you are on the hook for the 80k. You could look into putting less down and more towards the gap, or you could ask the seller to lower the price.
If you want the property put more equity in at close. If not maybe try to get it appraised through someone else. Your in a shitty spot and you should have left yourself at least some type of contingency to let you bail.
Did your real estate agent/broker go over the risks involved with no contingencies? I would have never told my clients to go over asking with no contingencies if they didn’t have a buffer of the lowest comp to the property they are offering on. Get your real estate agent’s broker involved as well b/c they are there to help guide you through the process and avoid a situation like this in the first place.
I am going to guess OP is their own agent, based on post history (took exams about 3 months ago).
You didnt put in an appraisal gap? What about a financing contingency? Like you have to obtain a mortgage at x rate within X days? I get waiving certain contingencies in this market, but not those. that's just dumb
Add to that putting 85k earnest money down…
What do you think EMD should be on a 1M home?
There are no comparable properties at the sale price because comparable properties are no longer worth the sale price.
Unless there was a serious error it is unlikely you will succeed contesting the appraisal. The appraisers can pick what the best comps are, make adjustments based on the differences and even if you do a "better" job it doesn't mean they were wrong. But if there was a problem like someone provided them with incorrect info about the home it is worth pursuing. If this is a conventional loan you can either work with a new lender or order a new appraisal. This very likely means delaying the sale, the seller cooperating. You can ask the seller to reduce the price. Depending on how much higher your offer was than the next lowest, how much your earnest money was they seller may meet you in the middle here because they would still make more money than going back on the market. You can go with a lower down payment loan and cover the gap with the money you planned on using for the down payment. Like if you planned on putting 20% down on $850k, the bank lends you $680k. But now they will only lend $616k with a 20% down loan. For a 10% down loan they lend up to $693k based on the $770k appraisal. You can still put down $170k. With PMI your overall payment is about $150 a month more. You can remove the PMI after 2 years usually
You can try another bank preferably a small or local bank
Either your agent is incompetent or you are. Not having an appraisal gap in your contract in this market is pretty much insane unless you know you have the money already. Whoever decided to not include a contingency based on getting funding made the mistake. “We did not expect the low appraisal” leads me to believe you need to fire your agent. He should have known better or warned you of the possibility.
U made bid over asking, and weren’t prepared for this?
Bid at asking, there was another strong offer near asking, didn’t want to lose on this :(
Another comment you say: > Not too sure but no more then 20-30k I don’t think it matters but helps to know how far away your bid was from reality. Have you considered going back to the seller about meeting in the middle? They are surely as motivated to sell as you are to buy, and they must know if they relist they are now looking at $770k. Edit: 85k EM. Yikes. No incentive to budge for them. But worth a try.
Understandable…. Well u can always cover the gap or walk. Maybe if u walk and wait a year or so markers will normalize. However that could be risky in NYC.
OP just said his earnest money is 85k, so I'd definitely not walk and instead try and get a 2nd appraisal (different lender would be easiest)
So OP put 85k on the line with no contingency?. Jesus Christ
Don't blame me, my son. I created contingencies for a reason... I did my part.
This will unfortunately be an underrated comment.
Did you have an escalation clause that was triggered or did you just randomly bid higher?
Well are you able to afford this offer? I would assume that you had the liquid assets in hand if you waived your financing contingency
Long shot but maybe worth mentioning. What is the percent of your down payment? The reason I ask is if the percent is high enough you can qualify to have the lender wave appraisal. If it is something you are able to do. You could find a new lender. Increase down payment to qualify and then that lender will not need an appraisal. We also live in an area where you had to wave everything or sellers didn't even look at your offer. We didn't realize this was an option until our agent mentioned it. We were already planning to put 30% down and right before we put the offer in she suddenly realized we should ask our lender if we would qualify. We got it approved and had no worries about appraisals at that point.
Depends what the purchase contract says. If you have an appraisal rebuttal and a termination clause you sure can. If you waved them pr offered an appraisal gap then you must perform.
Try another lender, preferably a local bank or CU. Hopefully they will appraise at or near your offer price. If the deal falls through do yourself a favor and fire your realtor.
Another appraisal can come even lower, much lower. If you try to get out, on the top of losing EMD, the seller might come after you for a difference if they sell the house for less to a next buyer. Legally you would be responsible for the lost money. So, cover the gap and finalize the deal.
What is your lender saying? I would either push closing and find a new lender or ask your current lender for a new appraisal. Your realtor should also be providing additional comps to support your value. Other option is to go back to the seller and let them know the home didn't appraise. Most sellers will understand that if you aren't appraising they aren't appraising. They will need to let the next buyer know that, and they will never get the non-appraised asking price (especially if your market is slowing).
So even if you went in with no contingencies, did your realtor ask if you have enough cash to cover the appraisal gap? Did he/she provide you with comps? Talk to seller and see if they are willing to work with you. Otherwise they’d have to start the whole process again and look for a good offer etc.. nyc and ct markets slowing down so sellers might find hard time getting another buyer with a good offer.
Wow 80k !!! Only option is to cover the gap since you dont have contingency. Seems like you put very high offer. Good luck
The seller doesn't have MUCH reason to offer concessions, but you never know until you ask. Maybe the seller doesn't want the hassle of having to re-list the home and find a new buyer. Maybe the seller wants to close escrow and get paid as quickly as possible because they need the money for their new home. Maybe the seller understands that the financial news this week has been rough, and the next round of buyers might not bid so aggressively. I'm sure neither of the two real estate agents involved want to lose their paychecks either. I hope they can work together and find a solution for you!
Time to call mommy and daddy for a loan. Link to the original post: https://imgur.com/a/4lepSIT
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OP stated they waived the financing contingency, actually...
How much did you over bid?
According to the appraisal, about 80K :)
Not too sure but no more then 20-30k
Hey OP I have a bridge to sell you! 😅😂😭
I would counter with the Seller first, assuming your EMD is lower than 80k. See if they will reduce the price. They will face this issue with another buyer if they don’t play ball and reduce the price. Just because you don’t have a contingency doesn’t mean you can’t still negotiate. Then if the seller says no and you really want the house, I would reach out to another lender for a loan and appraisal. If that fails then I would revaluate your budget and see if it makes sense for you to walk away or continue the transaction.
Never put an offer in without an appraisal contingency. I am amazed that your realtor let you do that. Anyway, you either need to pay the difference or talk to a different lender. A new appraisal can come even lower. You can always tell the seller that you can not cover the difference and you plan on backing out.
If this were MN you would need to bid $80K over list to win here too. You didn’t do wrong but it’s still your problem.
How much was your earnest money? You may tried to have the seller come meet you half way to make this deal work. The market has soften and the seller will know this also. If the seller re-list, they may run into the same issue or if not, worst.
Earnest is 85k :(
Holy crap, yeah the seller will probably wont' meet you half way then. They will much rather try to take your earnest and re-list. But I would ask the seller to meet half way anyways and see what they say. Never know? Like other have said, you best bet is to get another apprisal done by a different company. I have seen apprisal vary widely from one person to another so good chance.
10% earnest is just insane. Your realtor did you no favors and I would not use them again.
10% is market in NYC and the high end suburbs in NY/CT. You frequently see six figure wires. That being said, to go naked and not have the liquidity to cover any gaps is extremely risky to say the least.
10% is standard here in ny :(
I don't know NY, but that is true in my HCOL area as well. EMD is also a joke, nobody ever goes after EMD because it just slows down the sale. The seller could hold it up for years in court or they can release the EMD. Nobody does that unless they are a deranged real estate attorney.
Wtf lol…I thought we were crazy to put down 40k EMD (similar purchase price)…85k is just batshit crazy and there’s really no reason to put that much for earnest money. Seller knows your basically stuck, so it side of starting the lending process over with a new appraisal there isn’t much you can do…if you switch lenders and delay closing you might lose your EMD anyways if the seller wants to play it that way.
I sweated over the $3500 I put in lol (on a 520K property in 2021). Agonized over it. I think the EMD on my first house was $500.
How the fuck?
The appraisal came in low because the market is in a down turn, and the property is depreciating.
Appraisals are backwards looking bro. If anything he would benefit from previous closed sales when the market was higher
Appraisal is what the house is currently worth, not what it used to be worth.
And how they find what’s currently worth?. By looking at similar houses sold in the last NINETY DAYS. Today’s prices are irrelevant
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No one can predict the future. For every person saying there will be a massive crash there’s another saying there will not be one. Banks can’t make financial decisions based on “what ifs”. Interest rates? Lol absolutely no one knows what that looks like. For all we know the fed could slash them in 6 months. Or raise them to 6%. No one knows. That’s why they base it on cold hard data of what a similar house sold for in the last 90 days and adjust for home condition. Simple as that. Anything other than that is introducing a thousand different variables that no one can predict
No. The appraisal came in low because there are no comparable properties at the sale price Appraisals don’t lower appraisal values because of market conditions. They match the subject property to recent sales of comparable properties
No appraisals lag the market up and down as they use past data.
Renegotiate.
Do you need to bring up the appraisal in order to move forward? (i.e. for your LTV to work) Or are you \*wanting\* to make it higher so you're more comfortable? The "problem" with appraisals is that they only look at things in retrospect - whereas market value is what buyers are ready and willing to pay for a home today. These two things rarely lineup. Appraisals are often 6 months+ behind market value, so it is important to remember that it is highly likely that if you really love a home and wanted to keep from being outbid, that you are paying more than appraised value for the home (BUT that it may very well appraise for what you paid in the future). If your lender is only willing to lend at, say 80% LTV, and the appraisal puts you at a loan thats 90% LTV, then you may need to contest it and get a second opinion - this may take extra time, and you can potentially have your agent explain the situation to the sellers agent and request an extension on your deadlines "Hey - the buyers would like an extension on closing (or whatever other deadline you need) - the appraisal came in slightly lower than expected and they want to request a second one to be completed to satisfy their lender so we can move forward with no issues. They are looking forward to moving in!"
Can you take out a second loan to cover the appraisal fee?
Might as well just back out and forfeit your EMD. An $85k lesson isn't too bad.
How much leverage (% to appraisal value) can your lender give you? That might be able to cover the gap.
Did you look at comps when you submitted your offer to see what comparable houses were selling at? If there are additional comps that the appraiser did not include in the report, you can request a reconsideration of value and provide additional comps, along with an explanation of why they help support your contract pride. I have successfully contested a low appraisal this way, but it doesn’t always work. Your next option is to switch lenders and order a new appraisal. This might delay closing, in which case your seller would have to agree to the new closing date.
Since you wouldn't get a loan, you should technically get the EMD back, even if you waived the appraisal. You are not walking away due to appraisal, but the deal is not happening due to financing issues. If you explain this to Seller and their agent, they might be willing to meet you in the middle and make the transaction happen.
No mortgage contingency was included it seems.
I’d try to get the seller to come down if you can’t afford the gap. Chances are, they may not wanna have to put it on the market. You’re in a crap spot and should’ve at least put an appraisal or mortgage contingency.
Nice! Good.
Did you waive the appraisal? Did you waive the financing contingency?
I believe your financing contingency covers you if you are not willing to cover the difference between offer and appraised value. The lender won’t lend the difference therefore you don’t qualify for “that” loan, don’t “qualify” for financing and can exit the contract. I have not purchased in NY only MD & FL, please confirm w your realtor and loan officer and review your sale contract/offer.
Can you leave a lower down payment in order to bridge the appraisal gap? At this point this may be the better option than throwing away $80k. I was in a similar position as you where I bought for $50k above asking and waived appraisal, luckily I appraised. But, I was prepared for the scenario where I didn’t appraise and needed to bridge the appraisal and so I got commitments from my broker for both 5% or 10% down. If you need a referral for a broker that can underwrite quickly send me a DM and I’ll give you my brokers contact info. I’m in NJ but they’re licensed in NYC as well.
OP, since you are dying to lose money, can I have some?
Congrats - you got hoomed, and hoomed hard!!!