Wednesday, May 2, 2012

How To Challenge A Low Appraisal (cont.)

A challenge should be based on specific errors rather than opinions.
2. Negotiate a new deal. Buyers are allowed to challenge a low appraisal, but usually they prefer to renegotiate the contract. A lot of buyers are actually excited if an appraisal comes in for $20,000 less than they offered because they assume they can negotiate to buy the house they want for less money. But that's only if sellers are willing to accept the lower price, which many times they're not.
3. Pay extra. Every negotiation is specific to the individual circumstances of the contract, how much the buyers want the house and whether the sellers are willing to drop the price or assist with the financing.
Not all sellers are willing to negotiate, however. So sometimes after an appraisal comes in low, buyers must pay additional cash in order to meet the agreed-upon sale price. Negotiations should be as creative as possible, including seller financing or other concessions.
4. Challenge the paperwork. The individual who pays for the appraisal, typically the buyer, can request a copy of the appraisal and review it. Real-estate agents and buyers would need to provide additional facts about comps or point out mistakes regarding such items as the number of square feet or the number of bedrooms.
You should check the comps to be sure they have geographic relevance and the same interior and exterior features. You can also hire another appraiser to do a review of the appraisal for an additional cost.
5. Request a second appraisal. If a challenge or a review doesn't change the appraisal, then a buyer can ask their lender to hire another appraiser. Be sure to request someone with geographical knowledge and someone competent and explain why you are asking for a second appraisal. Either the buyer or the seller can challenge an appraisal or even request a second appraisal. A challenge should be based on specific errors rather than opinions.

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