Appraisers have a tough job in this market

We listed a home for a client in February. Even with the down market we were optimistic our client's home would sell quickly. We worked with her to price her home right based on our thorough review of the neighborhood. And she had done an excellent job of staging her home and preparing it for sale.


The listing received 3 offers in 4 weeks, and the third offer was accepted by our client. The buyer completed his inspection and the inspection contingency was cleared. The buyer's lender also issued a loan commitment, which was subject to an appraisal that supported the purchase price. Everything was on track.


Then the property was appraised. As it turns out the appraisal came up more than $11,000 short of the contract price. Both the seller and the buyer were shocked. The seller had done everything right to sell her home quickly at a fair market price. And the buyer had toured dozens of homes before deciding that this home was the one that met all of his needs at a fair market value. The buyer did not have $11,000 in extra cash to bring to the closing table. And the seller did not want to lower her price.


Appraisers have a tough job in this market. Prices have been changing quickly, and with fewer sales these days it can be a challenge to identify a solid group of comparable properties in some neighborhoods. But we were surprised to see that two comparable homes from the same neighborhood were excluded from the appraisal, while two properties located a mile away and in another city were included.


Both the buyer and the seller felt strongly that the appraisal was incorrect and that a second appraisal should be ordered. It wouldn't be that easy, however. The appeal process would involve a lot of work, time and patience. We'll cover what happened next in a future post.


Have a good night,


Dan Miller, Keller Williams Realty and DaneCountyMarket.com