My wife and I recently had an offer accepted on a new home. The sales price and inspection points were agreed upon with the seller. We were quite pleased with the sales price as it was a good amount less than the comparable homes in the neighborhood. Our mortgage was conditionally approved pending the results of the appraisal. We received the appraisal report a couple days ago and the home valuation is approximately $20K less than the agreed sales price. It reviewing the document our realtor and I noticed several problems with the appraisal. First, the report stated that no improvements were made on the home in last 15 years; however, the basement was professionally finished within the last 5 years. Second, a majority of the comps came from surrounding, yet dissimilar, neighborhoods. The only comp from the same street sold for more than $20K above our sales price. Speaking with the lender, our options are as follows (My impressions/thoughts are the parentheses):
1. Appeal Appraisal (rarely works according to lender)
2. Pay in cash the difference between the appraised value and lose any benefits for increasing the down payment (increased initial equity, lower monthly payment)
3. Split the difference with seller (unlikely due to the nature of negotiations and losing equity)
4. Get the seller to renegotiate sales price to appraised value (unlikely given the negotiations so far)
Has anyone had similar problems with appraisals in the past? Any advice you can share?
I understand that $20K might not be a lot in the scope of a home purchase but my wife and I are being very disciplined in our approach. We have no need to move imminently but we found the home in a perfect location near work and proximity to family. We have a lot of equity in our current home and were planning to pay off student loans and front load our daughters 529 with the proceeds.
1. Appeal Appraisal (rarely works according to lender)
2. Pay in cash the difference between the appraised value and lose any benefits for increasing the down payment (increased initial equity, lower monthly payment)
3. Split the difference with seller (unlikely due to the nature of negotiations and losing equity)
4. Get the seller to renegotiate sales price to appraised value (unlikely given the negotiations so far)
Has anyone had similar problems with appraisals in the past? Any advice you can share?
I understand that $20K might not be a lot in the scope of a home purchase but my wife and I are being very disciplined in our approach. We have no need to move imminently but we found the home in a perfect location near work and proximity to family. We have a lot of equity in our current home and were planning to pay off student loans and front load our daughters 529 with the proceeds.
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