when appraisal comes in below the selling price..

Those are your basic options. Note that it's possible a second lender will figure out the situation and want a copy of the first appraisal.

Also consider that you're overpaying and the appraiser may have done you a favor by pointing that out! $30K on a $500,000 purchase is nothing to sneeze at.

If you have a financing contingency in the sale contract, the appraisal being low (and the resulting unavailability of a mortgage loan on the terms defined in the contract) could give you a way to walk away -- or threaten to, in service of negotiating a price adjustment. Talk to your lawyer about that to be sure the language is solid, before you start down the path.

can you share the listing of the property ?

Exact thing happened to a friend of mine in Brooklyn last month. He had to get it re-appraised based on more recent comps by a second appraiser. Good news is that it worked out int he end, but it did delay his closing by about a month.

thanks uptown_joe.

i would agree what you said if the market were not crazy in brooklyn. this is my 3rd bid; lost first 2 even bidding 5% over the asking price.

given the current market, it would be nearly impossible to re-negotiate the price. i will consult with my attorney before proceeding.

thanks ottawanyc.

that's why i am thinking about using 2nd lender hoping will remedy the situation a bit.

why is any of this surprising? if one is willing to pay 15-20% more than last year, fine, just don't expect a bank to be willing to go along at 80% LTV.

thanks crescent22. it makes sense; so u suggest i stick to my current lender with extra down?

Certainly it's easier not to go to a new lender, but it really must be weighed relative to how much you need that extra 30k handy.

I would use this as a potential bargaining chip with the seller, re-examine the offering price and if you are still going ahead, as is, consider putting up more money, selecting another lender or attempt a discussion with the appraiser(in that order)

My building just had a unit go into contract for 40% above what it appraised for during a refinance a year ago.

The contract price is for $1,250 per square foot. Ten-year old renovation, well-kept but nothing fancy in a no-amenity walk-up. I'm going to be really curious to see this appraisal.

Four units refinanced at around the same time last year, all in the $850-1,000 per square foot range depending on finishes. Unless the appraiser gets clever with square footage and finds an extra 100-150 square feet hiding in the walls, I can't imagine this will appraise. We shall see.

i have read the appraisal report. imo a few of factors that contributed to the lower appraisal.

1. market velocity: brooklyn market took off this spring; while most of comparables used were either last winter or last fall.
2. lack of inventory: lack of condo inventory caused lack of good comparables.
3. market knowledge of the appraiser: it didn't help much that the appraiser was from flushing, queens. in his evaluation, the market situation in brooklyn is only "stable"; while numerous market reports say otherwise.

Had the same thing happen to me in April for a condo in Brooklyn Heights where we were putting 20% down. Appraisal came in 4.5% under our offer that was 1.5% over list.

We were able to renegotiate with the sellers and ended up at the original listing price which equated to us putting 23% down. May be able to do something similar if the sellers just want to be done and aren't looking for the most money possible.

wow. that's nice. the seller gave you 6% bonus. did you have appraisal contingency in your contract?

1.5% bonus, we paid the remaining 3% as more down (23% instead of 20%). We had a financing contingency which normally includes language around appraisals, but best to verify with your RE lawyer.

oh. 1.5% is better than nothing. i didn't have appraisal contingency on the contract. will talk to my attorney to see if there a chance for re-negotiation.

my appraisal came in at the contract price... i just figured appraisers just tell the bank what they want to hear. I had wondered whether appraisals ever came in less than the sale price; now i wonder if appraisals ever come in higher than sale price.

Still doesnt give me any confidence in what appraisals say though.

Our appraisal came in 50k over contract price, so yes, it does happen - our buyer's agent was really surprised as we all expected it to come back spot on with our buying price.

Just had a similar thing happen to me in Brooklyn as well this week. Bought a townhouse in Brooklyn slightly over ask (2%) that is in immaculate condition. Sellers would not move forward without us dropping appraisal contingency, which was the case for every place we had bid and lost in the last 6 months. We were the cover bid and best bid on a few different places that all went to all cash buyers and were quickly losing interest in bidding wars and getting shopped to the all cash people, we finally decided to drop the contingency.

Both brokers and even my lender assured me that there would be no problem with the appraisal, which is not dissimilar to tits on a bull with respect to its usefulness. Appraisal report came in ~5% below transaction price and stated "THE APPRAISER USED A SALE FROM 16 MONTHS AGO. THIS SALE IS THE MOST SIMILAR SALE WITHIN THE SUBJECT'S NEIGHBORHOOD AND BEST REFLECTS THE MARKET"

Luckily I was prepared to make up the difference myself, but the bottom line is you are at the mercy of someone who many times has no clue about the neighborhood and in my case an apparent lack of knowledge about the market in general as evidenced by referencing a sale from 16months ago in a much different neighborhood and in no way comparable shape or detail when determining the value of my purchase.

If you are not prepared to make up the difference, get more leverage from your lender or let the deal go to someone who is willing to pay all cash then you are at a serious disadvantage right now.

This is a great time to,sell.

Hi All,

Steven I hope you don't mind but I also have a question about an appraisal--Does anyone know what the rules are for comps? For example, we are buying in a luxury high rise and the appraiser used the same building for most of the comps. Months after the fact the bank suddenly said they need market comps from another building in the neighborhood. The appraiser did put in at least 1 comp from a similar building. What gives?

Just put in 30 k extra. Appraisal is not a precise science even if you live in a building with many similar apt sales.

i agree with 300_mercer. appraisal can get even more skewed in fast growing or declining market.

I am selling my apartment in Manhattan and the appraisal came in 5% under the sales price. Several of the "comps" in the building that went to contract weeks before ours hadn't closed at the time of our appraisal. Their sales prices would have more than justified our price. Fortunately, my buyer had been outbid on those other apartments and realized the appraisal was too low. He's just putting a little more money down.

How does the value today compare to that old appraisal?