Nearly everyone who has bought a home understands that the asking price rarely matches the appraisal. Such is the nature of business transactions, but it can cause headaches for those involved in real estate transactions. The bank or lending institution will likely only agree to the appraisal amount, leaving the buyer and seller to iron out their differences or move on.
Sellers benefit from bidding wars and high prices
Sellers may know they have a high asking price, believing the property is worth it. They may also benefit from a heated bidding war. To accommodate these heightened prices, the seller may ask the buyer to remove the usual contingency that the deal dies if the financing falls through, thus forcing the buyer to cover the difference between the asking price and appraisal.
There may be alternatives for buyers
Since the two numbers rarely match, it is common for the buyer and seller to negotiate a deal that lands somewhere in the middle. If the differences are too significant, the buyer can argue for a lower price by providing comparable sales in the area. The buyer can also ask for a second appraisal, known as a reconsideration of value. Common acceptable reasons for doing this include:
- The appraiser did not understand the local market.
- There is new information that increases the property’s value.
- Someone attempted or succeeded in influencing the appraiser.
Attorneys can provide valuable guidance
Buying a home is often the most important business deal for many involved. While some states require a real estate attorney to be involved in the transaction, Colorado does not. Nevertheless, these legal professionals can help negotiate a price, find a creative solution and look after the client’s best interests.
