I recently represented the buyers in a deal where the appraisal for the house came in 30% less than the agreed-to purchase price. 30%, that’s not chickenfeed.
But after the initial shock, no one panicked. Because it was obvious that it was a seriously flawed appraisal (to put it very politely). The buyers knew it, I knew it and the listing agent and seller also knew it. The only one who didn’t know it was the lender. And if we were going to move forward with this deal, they needed to know it too. But they’re located somewhere in Ohio and, of course, didn’t know diddly about the Tucson Foothills and were therefore completely guided by the alleged sanctity and reliability of the appraisal. So it was obvious that somehow I had to get the appraisal revised or redone or re-somethinged.
So, with the full support of my buyers, the first thing I did was call the appraisal company and get the manager on the phone. I thought maybe I’d be able to convince him to have a look at the appraisal himself and see if he agreed with me. But after stating my case and not hearing any probing questions or encouraging sounds from the other end of phone, I asked Mr Manager if he agreed with me that the foothills is more difficult to appraise than other areas of Tucson.
And at least he was honest. He admitted right off the bat that he didn’t know a thing about the foothills. Had never set foot in the foothills and didn’t even know where they were. He’d recently blown into town from Phoenix to open the Tucson branch of some big appraisal conglomerate. But still, he didn’t want to listen to some
smart-ass, know it all Realtor telling him his business either. So he started in with the ‘oh you Realtors are all the same, whenever the appraisal doesn’t come in you blame the appraiser, blah blah blah’
And not wanting to listen to his whining, I pulled my ace in the hole.
I let him know that there were 3 offers on the house – from 3 different buyers, represented by 3 different Realtors - and all 3 were within $5k of each other and 30% higher than his appraisal. And isn’t that what appraisals are supposed to measure – the market price for a house – the price that a buyer is willing to pay and a seller is willing to accept, in an arms length transaction. And we had 3 of them. That got his attention for a second but still didn’t make much of a dent - this guy was thick. And he just continued his defensive whining.
So I chucked that and moved to plan B. I wrote and emailed a 3 page letter to the lender pointing out in no uncertain terms why the appraisal was grossly off the mark and apparently done by someone who had no business doing appraisals in the foothills. And I also sent them the two other offers and invited them to call and speak with the other two agents to verify that they really did have ready, willing and able buyers for the house. And I also called the lender and pleaded with them and insisted that the buyers and sellers should not have to suffer - and not be able to buy and sell the house - because of the gross incompetence of some appraiser.
And somebody up there agreed with me, because the lender ordered a new appraisal (from a different appraiser) and it came in within a few points of the agreed-to purchase price, and we moved forward and closed escrow. And other than the thrill of having won it for my clients, and for everyone involved, it was also very gratifying to find a banker who cared enough to hear me out and to stick their neck out and see it through. All’s well that ends well.
That’s a true story.
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