Should a Buyers Agent Challenge a Short Appraisal?
Should a Buyers Agent Challenge a Short Appraisal?
The Florida Real Estate Market is very healthy with properties selling quickly for more than expected, particularly in the desirable Tampa Bay Area.
Remember that the lender will only lend money on either the purchase price or the appraised value...whichever is less.erties selling quickly for more than expected, particularly in the desirable Tampa Bay Area.
As a result, many times the comparable properties are lagging behind, which is causing some properties to not appraise for the contract price. That means that the appraisal came in “short”... below the purchase price.
A few weeks ago, one of my buyers contracts received a “short” appraisal. As a registered appraiser, I already checked the comps and knew that the price was rich and the appraisal would be a stretch. Buyer just loved the house with all the nice upgrades. Yes, it was at the high end of the market.
When the appraisal came in at $20,000 less, I asked for price reduction to the appraised value. Seller's Agent threw a fit and told me that I better challenge the appraisal, OR ELSE…
First of all, the appraisal was pretty accurate. There were no loose ends or holes to poke at to discredit the appraisal. But most importantly, is it really my job to challenge the appraisal? Of course not.
As an Exclusive Buyers Agent it is my job to get the price as low as possible for the homebuyer...not to try and raise the price for the sellers benefit. Especially since the State Certified Appraiser already said the property is worth less.
The listing/sellers agent threatened to sell the house to another buyer (no,he can’t do that) if I didn't “do something” with the appraiser. I refused.
IT IS NOT MY JOB TO RAISE THE PRICE! My job is to convince the seller to lower the price. Yes, just lower the price and there will be no problem.
War was on...
The seller's agent took it upon himself to challenge the appraisal with sold properties (comps) from a different community that was a step up and had nothing in common with this community or property. The agent was simply off the mark on value. He was also off the mark thinking that my buyer would simply cough up the difference in cash.
The appraiser turned a deaf ear and eventually the seller took the lion's share of the shortage and reduced the price. The Buyer paid a few dollars more.
Letting the buyer pay more out of pocket should be a last resort. A good Buyers Agent will never sacrifice the buyer's wallet to keep the seller and listing agent happy.
So here is my “Buyer-Expert” opinion:
It is rare to see anyone challenge an appraisal and win. Appraisers will almost
Why is it that most sellers' agents think that when the appraisal is short that having the buyer pay the deficit is somehow “fair”. I think “fair” is when the purchase price matches the certified appraisal. That's what's truly “fair”.
A good seller/listing agent should know the house value before they list the property. They should also prepare the seller for a “haircut” in case the appraisal is short.
The burden for a short appraisal should rest with the seller, not the buyer. This is not even a 50/50 proposition...it is the buyer paying fair market value for a property.
Nothing more.
For Expert Buyer Representation call Buyers Broker of Florida 727-202-9130.
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