Vail Daily column: Low appraisal brings loan to standstill
Ask a Realtor
Dear Joan,
I am, or was, in the process of selling my home through a Realtor I respect and trust. Unfortunately, my Realtor did not bring the buyer so she had no control or ability to suggest a lender for the buyers. I am unfamiliar with the lending institution for my buyer, and worse yet, have never heard of the appraiser this lender hired.
Now the appraisal has come in substantially different than the agreed upon purchase price. I have no idea why, and when we ask for a copy of the appraisal to look at the comparable sales (of which there are several to substantiate our price), the buyers say they do not have the appraisal, only the results, and want us to just lower our price accordingly.
The loan is at a standstill and it looks like the whole deal may blow up with us starting over looking for a new buyer. How does this happen that one uninformed appraiser has the power to do this?
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Dear Appraiser Miffed Seller,
Your question magnifies many difficulties that have come out of the government reaction to the housing bust of 2008. I do not know if the appraiser used in your situation was “spot on” with his appraisal, since we all have difficulty seeing our own property with objective vision, or if there is a substantial error there. I can explain your other concerns and the best path to take.
First, as a reaction to the housing crash that started in about 2008, part of the Dodd-Frank Wall Street Reform and Protection Act of 2010 was passed to try to eliminate close relationships with banks and appraisers, which they felt was partly responsible for the gross quantities of poor loans that were made. This act formed appraisal management companies that were to assign appraisers when the lender called, instead of the lender being able to call whomever they wanted. This, of course, caused more problems than it solved by often choosing appraisers unfamiliar with the various areas to which they were sent.
Second, as far as getting a copy of the appraisal, the truth is the buyers do not automatically get a copy of the appraisal because, although the buyer pays for it, the lender orders it and therefore owns the appraisal. A federal law has finally been passed that says if the buyer asks, in writing, for a copy of the appraisal they paid for, it has to be given to them.
As far as what to do next, there are no easy solutions. You can have your Realtor attempt to get the comparable sales (if they truly are comparable) that you know of to the buyer’s agent to give to their lender. However, having an appraiser change his conclusion is nearly unheard of, for a lot of reasons.
If the buyers are still willing to purchase your home at the agreed upon price, you can offer to pay for another appraisal, but only if their lender would agree to consider it. This is also a difficult process to accomplish. Probably your best bet is to try to negotiate with the buyers.
If they really want the house, and the timing for your closing is important to you, then there usually is a way that your Realtors can make it work. In addition to marketing skills, one of the most important skills your Realtor can have is being able to skillfully negotiate compromises to keep a contract on track all the way to closing. Best of luck to you!
Joan Harned is an owner and broker for Keller Williams Mountain Properties and heads up Team Black Bear, her own real estate team. Harned has sold real estate in Eagle County for 27 years. Contact Harned with your real estate questions at Joan@TeamBlackBear.com, 970-337-7777 or http://www.SkiAndTeeHomes.com.