Don’t let a low appraisal kill your Destin real estate deal

Posted on by admin_fletcher

Real estate professionals that were surveyed in June reported that many of their cancelled sales were due to low appraisals. You, as the buyer, do have some options if this happens to you. There is a chance that the Destin real estate deal can still be worked out.

A large part of an appraisal is based on prices recently paid for comparable local properties. Recently, finding “comps” that accurately reflect values have been a challenge. If the contract is for a non-distressed or “normal” sale and the only comparable prices are from distressed sales then the value might end up less than contract price that has been agreed to by both the seller and the buyer.

We experienced this in a Miramar Beach neighborhood just a couple of months ago. An appraisal was required and ordered by the buyer’s lender. Due to the fact that the recent comparable sales included properties that were bank owned (foreclosures) the property did not appraise at the contract price. During this time of record low home values, it is no wonder that more and more appraisals are coming in below the prices that buyers and sellers have agreed on. Even if you have a great job, sterling credit, an adequate down payment and money in the bank, the lender will still want a conservative appraisal. The lender is more interested in protecting themselves from a loss than they are in giving out a loan.

Here are 5 steps you can take:

1. Get the seller to loser the price. There is no guarantee that the seller will not receive a low appraisal from the next buyer’s lender.

2. Ask the seller to carry a second mortgage for the difference.

3. Dispute the appraisal – the key to a successful dispute is data. Find out.

4. Ask the lender for a new appraisal – if you have a good case that the appraisal was not accurate, ask the lender for a new appraisal

5. Get your own, independent appraisal – ask your lender for a list of approved appraisers and then request that both appraisals be considered.

If these tactics fail and you can not make up the shortfall in the appraised value, you might have to move on to a different Destin property or wait until the values increase in the neighborhood. Make sure your sales contract states that the sale is contingent on the property appraising at contract price.

Contact us for more information on Destin real estate

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