With the market growing so rapidly lately in the NE Florida Real Estate Market, we can honestly say it’s been a LONG time since we’ve seen Appraisals come in low. Demand is still high, inventory is still low and homes are selling fast & at or close to list price, specifically in the NW St Johns County area.
Recently our Team had not one, but two appraisals come in LOW during the contract process. What happens?
Subject House (A) was a home that was listed on the market For Sale approx (7) months after the current Sellers purchased the home as New Construction. The home was listed for $41,545 MORE than the Sellers had purchased the property for less than a year ago. However, not only had pricing gone up so much on new construction (to recreate this same house would cost approx $515,000 at the time of listing), the Sellers had also added approx $28,000 in improvements since closing.
As our Team normally does we met the Appraiser at the property, shared with him the comps used to price the home, shared with him the list and dollar amounts of improvements made by Sellers post-closing and also shared with him a Video we created showing side-by-side what it would cost to re-create this home NEW. Our contract price was for $11,000 under asking with a solid financing Buyer and quick closing. Appraisal came back $7,000 low so what now?
The basic options are typically 1. Seller comes down to match appraisal price 2. Buyer comes up with additional cash or financing to match appraisal price or 3. They meet in the middle at a compromise. In this particular situation, the Housers Homes Team was able to negotiate for the Buyer to come up the additional $7,000 difference in cash at Closing. Because oftentimes appraisals only take into consideration statistical demand and not emotional demand. The Buyers felt the value was still there and were willing to pay for it!
Subject House (B) went under contract at full list price only (3) days on market. We had recently sold quite a bit of this product/neighborhood home and we had NO worries about the appraisal process. The appraiser showed up 45 minutes late, drove in from over 1.5hrs away and stayed approximately 3 minutes and left all the data we prepared for him on the kitchen counter. We immediately were nervous.
When the appraisal came back $4,000 lower than contract price, we took a different creative route to get this transaction to closing. The Sellers had originally conceded to convey their washer/dryer/refrigerator with the home and do some miscellaneous repairs that did not affect functionality of the home. So in a compromise the Sellers reduced the purchase price to the appraisal price, yet our Team was able to negotiate for them to keep their appliances and waive the miscellaneous repairs to make up that difference for them.
Although both appraisal were contested, there is always a risk when contesting an appraisal that it will come back even lower than before out of irritation from the appraiser or more eyes on the property with more opinions involved. Know that it is SO important when Selling your home to have a professional in your corner to be able to navigate these challenges for you! The Housers Homes Team is willing, available, and experienced to help you in the NE Florida market!