Appraisal Prevents Purchase of Dream Home, Now What?

You have found your dream home and are fully qualified for the loan. You have made moving plans and measured your new home for window treatments. Then your loan officer calls with the heartbreaking news that the appraised value for your dream home is less than the agreed upon sales price. What are your options?

Since the advent of mortgage reform in 2008, low valued appraisals by questionably competent appraisers unfamiliar with local markets have prevented the closure of many viable real estate transactions. Traditionally, in cases such as these, the seller could lower the sales price or the buyer could pay the difference between the appraised value and the sales price in cash at closing.  In our current economy, these two options are becoming less viable as sellers need every dollar possible to pay off the current mortgage and buyers have limited cash.

This current dilemma is forcing real estate agents and mortgage professionals to develop creative solutions to a complex problem. One possible solution is to try alternate financing with a new appraisal. For example, if the appraisal returns with a low value on your anticipated VA loan then change to a conventional loan or an FHA loan and have a new appraisal completed. Yes, you may have to pay for a second appraisal but the transaction may thrive and be successfully closed.  

The next step in this process is to file a complaint against the original appraiser with the Georgia Real Estate Appraisers Board (see link below) using the original appraisal and the second appraisal as evidence. Through this process, incompetent appraisers could be removed from professional practice making real estate transactions smoother for future buyers and sellers.

http://www.grec.state.ga.us/PDFS/Appraiser/GREABRequestForInvestigation.pdf