When financing is involved on buying a home in Las Vegas, more than likely an appraisal will be a required item and contingency for the home purchase. There are only a few exceptions and homepath financing is one of them.
Many times the home will not appraise at the contracted price and that poses a problem. You have several options at this point when your Las Vegas home appraisal comes in low:
- Reconsideration Request
- The buyer makes up the deficiency by putting extra money as a down payment
- The seller lowers the price to the appraised value
- The buyer and seller re-negotiate the contract and meet somewhere in the middle
- The buyer and seller cannot come to terms and decide to cancel the contract
All options should be exhausted BEFORE the contract is cancelled! The first option the buyer or seller should use is the “appraisal reconsideration request”. The request comes from the buyer’s lender.
All agents involved in the transaction should go through the appraisal with a fine tooth comb to look for errors. Potential errors in an appraisal – just to name a few – may be:
- Incorrect comparables
- Old comparables (more than 3-6 months old)
- Distressed comparables used on a non-distressed sale
- Comparables with very low days on market
- Condition adjustments
- Upgrade adjustments
- Seller paid concession adjustments
Your goal is to respond to the appraiser with new comparable suggestions and in a professional manner. The reconsideration request should be well thought out and use big “appraiser” words like “paired analysis”. When I work on an appraisal request, I am ripping apart the appraisal report and NOT the appraiser.
The goal is to have the value adjusted appropriately or plea to have the report “thrown out” (in the event it is a REALLY bad appraisal!) Not all appraisals warrant a reconsideration because they are great reports and well thought out and there are just no other comparables to support a reconsideration.
Whatever route you take when you have a low appraisal, this should be the first course of action with your agent!
The question of “what is your appraisal reconsideration success rate” should be a part of your interview when you hire your Las Vegas real estate agent. Not all agents can do these or know this option exists. Our team success rate is 65%.