Options Out There If A Home’s Appraisal Price Is Lower Than Sale Price
BOULDER, Colo (CBS4) – Denver Metro Area home prices hit an all-time high according to the S&P/Case-Shiller Home Price Indices report released at the end of August. This fast paced real estate market is pushing prices higher, the problem is that appraisals often are not keeping up.
Boulder homeowner Russ Brinkman put his townhome on the market at $310,000 dollars. It sold in one day which is an indication that the price was right. But the appraisal came in at $296,000 – $14,000 less than the sale price.
“I was disappointed,” Brinkman told CBS4.
An appraisal less than the sale price impacts how much the buyer can borrow for the home. In some cases, the seller may be forced to lower the sale price.
“I think the initial appraisal was unfair to the actual value,” said Paul Stone, a real estate agent with Redfin Real Estate.
Stone appealed the appraisal on Brinkman’s townhome. He took comparable sales from a wider area, establishing how much value had increased in the entire neighborhood.
“It put more depth into the analysis – of what the market was currently doing at the time,” Stone told CBS4.
He also documented that the townhome was an end unit which wasn’t noted in the original appraisal.
Most homeowners may believe that an appraisal is final, but real estate professor Ron Throupe said that it’s perfectly acceptable to appeal.
“In a good market, the prices are rising fairly quickly. That can easily happen, where the appraisal is not reflecting what happened this month versus last month,” said Troupe, of the Franklin Burns School of Real Estate, in the Daniels College of Business, at the University of Denver.
Appealing an appraisal is a rigorous process. The real estate agent has to make the case for change in writing and get approval from the buyer, the buyer’s agent, the mortgage company, and the appraisal management company.
Paul Stone won the appeal on Russ Brinkman’s townhome. He was able raise the appraisal the $14,000 to match the original sale price.
–Written for cbsdenver.com by Special Projects Producer Libby Smith