Orlando Real Estate, Orlando Buyers Agent, Orlando Homes, Orlando Buyers Broker: Should the Buyers Agent challange a short appraisal?

Should the Buyers Agent challange a short appraisal?

Central Florida real estate is bouncing back faster than any other area in Florida.  Many times, comparables are lagging behind, which is causing some properties to not appraise for contract price.              

                                              

Not long ago, one of my contracts received a short appraisal.  As a registered appraiser, I already checked the comps and knew that the appraisal would be a stretch.  Buyers just loved the house and all the upgrades. Yes, it was at the high end of the market.                                                     

When the appraisal came in at $20,000 less, we asked the seller to reduce the price.  Listing agent threw a fit, and told me that I better challenge the appraisal. OR ELSE...

 

First of all, the appraisal was pretty accurate.  There were no loose ends or holes to poke at.   But most importantly, is it really my job to challenge the appraisal?  Of course not. As an Exclusive Buyers Agent it is my job to get the price as low as possible for the home buyer...not to try to raise the price for the sellers benefit.  Especially since the appraiser already said the property is worth less.

 

The listing agent threatened to sell the house to another buyer...if I did not "do something" with the appraiser.  I refused.  IT IS NOT MY JOB TO RAISE THE PRICE.  My job is to convince the seller to lower the price. Yes, just lower the price and there will  be no problem.

 

War was on.

 

The listing agent took it upon himself to challenge the appraisal with comps from a different community that was a step up and had nothing in common with this property.  This agent was simply off the mark on value.  He was also off the mark in thinking that my buyer would simply cough up the difference in cash. 

 

The appraiser turned a deaf ear and eventually the seller took the lions share of the shortage and reduced the price.  Buyer paid a few dollars more.

 

 Letting the buyer pay more out of pocket should be a last resort.  A good Buyers Agent will never sacrifice the buyers wallet to keep the listing agent happy.

 

So here is my "buyer-expert" opinion:

  

  • I have yet to see anyone challenge an appraisal and win.  Appraisers will never admit that they are wrong, even if they are.

 

  • Why is it that most agents think that when the appraisal is short that having the buyer pay half the deficit is somehow "fair".  I think "fair" is when the purchase price matches the certified appraisal. Thats whats truely "fair".

 

  • A good listing agent should know the house value before they list the property They should also prepare the seller for a haircut should the appraisal be short.  The burden for a short appraisal should should rest on the seller, not the buyer.  This is not a a 50/50 proposition...it is the buyer paying fair market value for a property. Nothing  more.

 

For expert buyer representation call Buyers Broker of Florida 407-539-1053.

 

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Representing ONLY the best interest of the Home Buyer...never the seller.

 Eve Alexander Orlando Buyers Agent

 

Comment balloon 30 commentsMike & Eve Alexander • September 15 2014 11:00AM

Comments

Eve, I just literally got off the phone with a past client that is applying for a refi, and he got an appraisal that was SO wrong.   I went back into comps, and sent them to him, and they should adjust the amount.      We really have not had too many appraisal problems around here.  Values are increasing nicely, and not many are coming back low.

Posted by Joan Cox, Denver Real Estate - Selling One Home at a Time (Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373) almost 3 years ago

Joan:  It is great that you were able to help out a former client...lucky for them they had you to back them up.

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) almost 3 years ago

Eve, depending on how badly the buyer wants the property.... it should be the listing agent's job to challenge the appraisal, or have the seller reduce the price.

Posted by Joan Cox, Denver Real Estate - Selling One Home at a Time (Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373) almost 3 years ago
Take action if it's a moral certainty... tread carefully.
Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) almost 3 years ago

I meet the appraiser at my listings. If I'm worried the appraisal may be short, I'll contact home under contract to see what buyers paid. While they aren't closed sales, if the appraiser sees an upward trend, he may go along with the value. However, that's my job as a listing agent to prove, not the buyer's agent's.

Posted by Tammie White, Franklin Homes Realty LLC, Franklin TN ((615) 495-0752 or www.FranklinHomesRealty.com) almost 3 years ago

Good post. All you said was good, but the best  comment you made was this one..."I have yet to see anyone challenge an appraisal and win.  Appraisers will never admit that they are wrong, even if they are."

Boy, howdy!

Posted by Jon Quist, Tucson's BUYERS ONLY Realtor since 1996 (REALTY EXECUTIVES TUCSON ELITE) almost 3 years ago

Great representation for your client.  Yes, if the appraisal falls short, it's really the listing agent's and seller's responsibility. They can try to challenge, if they have the comps.  Otherwise, it sounds like the original number was more of a pipe dream.

Posted by Debbie Gartner, The Flooring Girl & Blog Stylist -Dynamo Marketers (The Flooring Girl) almost 3 years ago

 Boy sure do like small rural markets where 95% of our sales are listing them, selling them and no emotion, delay, back and forth with who does what for their share of the pie. Just review appraisal, find flaws and get rejected, the seller to spring for a new one if the bank allows. Or if it is valid, the bank won't allow another, not many options. Buyer peels it off, pays the missing $20K, the two split, buyer goes to new bank and rolls the dice for another appraiser.. if only way to get one and hopes if seller has the time to wait, etc. But attack problem, not person, other agent. When it is one agent, broker, no gap in communication, what is going on, waiting. One doctor for the surgery.

Posted by Andrew Mooers, Northern Maine Real Estate-Aroostook County Broker (MOOERS REALTY) almost 3 years ago

You are correct that when you represent the buyer, it's not your job to challenge the appraisal. However, I did do just that not so long ago because my clients were worried about the true value of what they were buying. The appraiser upped her value by $10K after I sent in alternate comps. Helped to make the deal happen in the end as initially both buyer and seller wanted to cancel the contract.

Posted by Nina Hollander, Your Charlotte/Waxhaw/Fort Mill Area Realtor (RE/MAX Executive | Charlotte, NC) almost 3 years ago

Eve, I have challenged appraisals where I have spotted errors and have successfully had the appraisal modified.  Numerous times in fact.  

Though, I do agree that it's not the buyers' agent that should be challenging but the listing agent.  Most appraisals are very good and spot on, but appraisers are human and make errors.  Especially those from out of the local area not familiar with the neighborhood in question.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) almost 3 years ago

Great buyer advocacy by Eve Alexander.  Just think what would have happened if the buyer had been using the seller's agent for "representation".  There would have been no representation and no one going to bat for them. 

 

Posted by Paul Howard, NJHomeBuyer.com Realty, 856-488-8444 (Paul Howard, Broker, NJHomeBuyer.com Realty 856-488-8444) almost 3 years ago

If any agent on any deal uses the term or else then my hackles go up and it is game on, but normally the or else response from me is I'll see your or else and raise you my client will go somewhere else.

Posted by Joe Pryor, REALTOR® - Oklahoma Investment Properties (The Virtual Real Estate Team) almost 3 years ago

Laura:  Morals =fiduciary for sure

Tammie:  Sounds like you a doing a great job for your sellers.

John:  Souds like the warm weather of AZ and FLA have the same kind of appraisers.

Debbie:  It certainly helps when the seller is not allowed to dream.

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) almost 3 years ago

Oh Andrew...your comments always tax my brain.  While I totally agree that dual agency is the easiest for the agent, having "one doctor" also means that the only one paying the bill is the buyer.

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) almost 3 years ago

Eve and Mike,

Over the years I have interacted with scores of appraisers, and have found most to be reasonable and accurate.  The primary issue I run upon is loss of the concept that evaluation is to some extent subjective.  If four houses set in a row having same floor plan, same sq. footage, lot size, condition of structure, roof, hvac, upgrades, etc.  It would be a fact based valuation; but there are differences, and some opinion enters the process.  There are some appraisers who think they are coming off Mt. Sinai with the two tablets of stone; but most will give great consideration to the negotiated price and even ask the listing agent if they have comps.  We also know that some agents have no real concept of anything beyond price per square foot.  Experience is the master teacher.

 

Name calling never produces the desired results.  We don't win them all, and attitude lowers the score.  I have gone to listing agents on closed sales and asked questions, then passed information along to the appraiser:  divorce, death, relocation does affect seller's willingness to sell at a loss.  Underwriters listen to strong arguments as well.

 

Our task is to stay positive, informed, and ready to take action in our client's best interest.  Right? 

Posted by Fred Cope, Looking For Homes With A Smile (Reliant Realty in Nashville, TN) almost 3 years ago

 

Nina: sounds like you did a good job of saving the deal.

Gabe:  Your experience has been different than mine...good for you.

Paul:  If the buyer was using the sellers rep, buyer would have paid without realizing they had an option...and the sellers agent would have just been doing their job by having the buyer pay the shortage.

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) almost 3 years ago

Unless for some reason the buyer wants to challenge the appraisal, then it doesn't seem to me it's the buyer's agent's job to do so.   Of course in these days of multiple offers, etc. some Sellers may not be willing to pay the difference and may want to move on to another buyer and roll the dice.  But the bottom line is the buyer should know what all the options are in order to be able to make a decision.  

Posted by Christine Smith, Exclusive Buyer Agent & Attorney, Canton, MA (Buyers Brokers Only LLC - www.BuyersBrokersOnly.com) almost 3 years ago

No, I do not challenge a short appraisal for a home buyer. Why would I want my client to pay more than fair market value? If they choose to come in with more money, that's their choice, but it's unlikely the home buyers I work with would. 

Posted by Pamela Seley, Residential Real Estate Agent serving SW RivCo CA (West Coast Realty Division) almost 3 years ago

Mike and Eve -- To answer your question, it is the responsibility of the listing agent to prove the value, definitely not the buyers agent.  I have not had this happen often, but when it did happen to my buyer, I asked that the seller come down to the appraised value or no deal as my buyer was not going to pay more than appraised value.  He came down.

Posted by Barbara Altieri, REALTOR-Fairfield County CT Homes/Condos For Sale (RealtyQuest, Fairfield and New Haven County CT Real Estate) almost 3 years ago

It really all depends on the appraisal. This is a difficult situation as you state, it is your job to get the house for your client at the lowest possible point. However, we have had some very bad appraisals over the last year and if the listing agent challenges only, you can not get the appraisal removed in the case of an FHA loan, only if the buyers agent challenges. We had one appraisal where the rules for the appraisal were on the front pageof the report and the appraiser broke everyone of them and still refused to adjust, even though there were plenty of recent  comps he went back almost a year in a rising market. Also the appraisal is not set in concrete, it is one appraisers opinion.

So. don't fully agree with you, but understand where you are coming from.

Posted by Nick & Trudy Vandekar, 610-203-4543, Tredyffrin Easttown Realtors, Philly Main Line (Long & Foster Real Estate Inc 610-225-7400) almost 3 years ago

 

Fred: Appreciate your comment.  It is true that agents need experience with understanding appraisals.  When an appraiser changes the appraisal they are in essance admitting that they were incompetent.

Christine: Its always the buyers call, but my clients are never eager to pay.  Even if they do, it leaves a bad taste.

Pamela: thank you for your refreshing answer.

Barbara:  Good job for the buyer.

Nick and Trudy: Today all appraisals go through AMC (appraisal management companies) who have their own procedures, but an appraisal challange cones from the lender. Yes, an appraisal is not science, just an opinion.

 

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) almost 3 years ago

The agents interferring with appraisals is one example of what drove housing prices through the roof, in a combined perfect storm.  Does anyone remember the bubble?  Those appraisals glutted an over-zealous market, to begin with.

Posted by Carla Muss-Jacobs, Principal Broker (503) 810-7192, Buyer Focused ~ Buyer Results (BuyersAgentPortland.com | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time) almost 3 years ago

When a seller is being difficult on lowering the contract price with a perfect comp available then you know you have more bargaining chips.  We had a condo like that last month where the appraisal came in $8k less than contract price.  We got them to reduce the price to match because we were already over 30 days in and that appraisal was sticking with that unit no matter what.  An identical unit sold in the same complex so there was no way around that.  

Posted by Kevin Mackessy, Dedicated. Qualified. Local. (Blue Olive Properties, LLC) almost 3 years ago

if I did not "do something" with the appraiser

 

That's a ridiculous thing to say, especially if the Agent hasn't reviewed the appraisal yet.  That means they overpriced the property, and promised the Sellers they'd be able to get that price, and are now looking bad, and want somebody else to fix their problem.

Posted by Raymond Denton (Resolute Federal Savings Bank) almost 3 years ago

Carla:  Time to get conservative and value it properly.

Kevin: you had a perfect argument.

Raymond:  Yes, the agent looked at the appraisal but was blinded by the fact that he wanted it higher, so did not want to acknowledge reality.  He was doing all the talking for the seller without checking with them...as you say, trying to save face.

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) almost 3 years ago

Mike & Eve Alexander - why on earth should buyer's agent challenge low appraisal? In fact, it's scary for sellers to see this number!

Good for you it worked out for your buyers - with just little extra and not everything.

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (eXp Realty) almost 3 years ago

Eve, If an appraiser is fearful of looking incompetent, then he is insecure.

 

As a mortgage loan officer or REALTOR®, I always respect another's work or opinion, and go out of my way to not be argumentative, but helpful.  I solicit the appraiser's thoughts and consideration; and rarely do we part with less appreciation for one another.  I park my ego in the parking lot, and trust he will do the same.  Two of my dearest friends are appraisers, and we worked together, as independent contractors for more than 30 years.  We had many re-consideration conversations.  I honored and defended their decisions afterward.  I believe most appraisers are right most of the time, and I make no demands nor accusations--just requests.  I would not want an appraiser who did not value "reasonable consideration" as part of his character. I salute those who endure ignorant criticism and embrace constructive critism in an effort to do the job right.

 

 Thank you for an excellent post.

Posted by Fred Cope, Looking For Homes With A Smile (Reliant Realty in Nashville, TN) almost 3 years ago

Praful:  We do think alike on that.

Fred:  I think that appraisers have a tuff job and I value their hard work...then they have to put up with flack from agents who are unhappy with the numbers.  All that, on top of their increased work load and pay cut...

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) almost 3 years ago

I agree with your position on buyer agent & listing agents roles.

If an appraisal comes in low, it's my job as the listing agent to see if I can perhaps influence a change. As the buyer's agent, I will ask the buyer what they want to do.  If they really really really love the home, and if I have a sense the seller will walk, we can discuss more money, but that's step 4 or 5 in the process.

There have been times when I've challenged appraisals and I've gotten some wiggle on some of them.  A few months ago,there was a sale which I could see in the mls as withdrawn and on the tax records as sold.  The listing agent wasn't very helpful.  When I reached his office manager, she shared with me the title company info.  I was able to get that to the appraiser which helped my buyer by the few $k we needed.  It was a team effort (except for the non responsive agent).

Posted by Claude Labbe, Realty for Your Busy Life (Real Living | At Home) almost 3 years ago

As a Buyer's Agent why would you encourage your Buyer to put forth an offer over the value of the property to begin with?  hmmm..

Posted by MaryBeth Mills Muldowney, Massachusetts Broker Owner (TradeWinds Realty Group LLC) over 2 years ago

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