By Chris Lane
By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
If an appraisal comes in below the desired sale price, the difference must be negotiated between buyer and seller. Most of the time that is a relatively small amount, maybe 5 percent of the sale price, leaving room either for the remainder to be paid in cash by the buyer or for the seller to drop the price without too much pain. In our case, it was nearly 20 percent lower than the sale price, leaving a gaping hole of cash between our offer and the sale price.
Fortunately for us, our seller chose to compromise and we were able to come up with extra cash to make up the difference. But getting to that point was nerve-wracking and the fact that the process is so overwhelming didn't make it any easier.
As soaring home sales continue, buyers and sellers are going to have to be careful. With houses often receiving multiple bids within days of going on the market, it can be tempting for listing agents to price homes high and for buyers to be aggressive with bids, but if a house doesn't make an appraisal, it doesn't matter what the list price was or if the house would seem to be worth the money.
"I show [clients] the numbers [from the market analysis], and if [their desired list price is] too high, I tell them, 'You can put any price you want on it, but even if you get an offer, it has to appraise,'" Fischer said. "[Sellers] are taking a big gamble."
That gamble can result in big disappointment for everyone. In my case, the story had a happy ending, but getting there felt less like a fairy tale and more like a mystery novel.