When your Ruidoso Appraisal is not what you Expected
An appraisal of $185,000? … boy oh boy that’s low. And you were convinced from your market research that your home was worth every last dime of the $205,000 to which the buyers agreed. And now your real estate broker is telling you that the purchase and sale may not occur. As a seller, you’ve just been broadsided by a low appraisal now learning the agreed upon sales price with your prospective purchaser is substantially higher than your property may actually be worth. At this point, most Sellers contract a severe case of the ‘never gunna’ sell blues’ as they wonder what happens next. And if you’re the prospective buyer, this figure means that the amount you’re lender will finance on the purchase is going be lower than everyone involved expected. And also as a buyer, you should interpret an appraisal value considerably lower than what you have offered as a big flashing red light, a heads ups you may be on your way to paying too much for a property.
Is the deal over? Is it time for either party to panic and throw in the towel? Can anything be done to save this purchase and sale?
Stop. Sit down. Take a deep breath. Then, whether you’re the Buyer or the Seller, get with your Real Estate Broker and try and determine what factors may have contributed to the lower than expected appraisal. As a Seller, was it due to factors that you as homeowner can correct? Items like obvious repairs and neglected maintenance or cleanup which you may consider remedying. If this is the case, you may be able to get the work done and ask the appraiser (very nicely I’d recommend) to take a second look and adjust the appraisal as they may see fit.
Though the Buyer’s lender typically requires and orders the appraisal, you, as Seller, always have the option to order another appraisal. This is a particularly good idea to pursue if you find out the original appraiser is just recently licensed or hired from another area so may be unfamiliar with the area where you’re property is situated. If you take this route, you should still make sure the appraiser is on the Buyer’s lender’s approved list of appraisers. Its possible that a second appraisal will uncover mistakes the first appraiser made. But there are no guarantees and, if when all is said and done, you still believe that the appraisal is just not accurate, and the appraiser is no longer returning your phone calls, you can always file a complaint with the New Mexico Department of Regulation and Licensing. I don’t recommend unless the appraiser is behaving as if they're from another universe. It won’t save your deal. But it may put a little balm on your wound if you find some satisfaction there and that’s important to you.
From the lender's standpoint, unless the original appraiser readjusts or the parties agree a second appraisal is more accurate, the mortgage transaction is dead in the water. So, as a Seller, you might simply lower the Purchase Agreement price to match the lenders numbers. As a Buyer, if you still want to move forward, you may carry a second mortgage with the Seller to make up the difference. You may consider just upping your cash down payment to make up the difference.
So, you see there are outcomes that can still be favorable even when the appraiser rains on your parade. Think creatively as a problem solver and its possible both Buyer and Seller can negotiate compromises that will make the lender move forward. If, after exploring all possibilities, you still can’t come to terms with the other party; contract termination is inevitable.