Hello,
I'm FSBO in California. Before advertising my condo I got an appraisal done (11/04). It was for a refi I was planning to do at the time, but never went through. I used this appraisal to set the purchase price. Within 2 weeks I had 3 offers.

I accepted one but it ended up falling thorough due to change of heart on buyer's side, but during this process they had ordered their own appraisal (2/05), and it appraised at exactly what my original (11/04) appraisal was.

Now, I am in escrow with a 2nd buyer, but their appraisal came in 40K less than the previous 2 appraisals. This buyers appraisal was ordered by the bank who is doing the loan for the buyer, who is also the buyers employer. Buyer said that the bank will not take any other appraisals unless they are certified by the bank. Now buyer wants to pay 40K less, saying he will not go with another lender who would take the other appraisals because it would cost him more and he says that he trusts this appraisal more over the last 2 that were done.

Also, in looking at this new appraisal, the appraiser failed to use 2 comps (one in 11/04, one in 12/04) that would've brought the value up stating that there are more recent comps that are consistent with a declining market.

As the seller, with 2 recent appraisals in hand, what recourse do I have? Is this a legitimate excuse for the buyer to back out?

We are using the standard CA real estate contract.

Thanks for your advice!!

If the contract was contingent on financing you can't force the buyer to buy the house if he can't get the loan. If the lender said they would make the loan even if the appraisal was lower than the contract then the buyer would have to make up the difference. If the buyer couldn't make up the difference you could make a claim on his escrow. If you made a claim on his escrow and the buyer didn't sign a release of escrow, you would have lis pendence (legal action) which would put a cloud on the title and you would not be able to sell the house until that was resolved. Just try to sell the home to someone else. Lenders can be stuborn and if your buyer will not find another lender just move on.
By the way, I'm in Florida, so contract law may be different in California.

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Brevard MLS
Satellite Beach Real Estate Brevard MLS
Advanced Brevard MLS

What part of California?

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Search Homes for Sale in SAN DIEGO and other San Diego Real Estate via the San Diego MLS.

San Diego

Thanks for the feedback, kyle. Makes sense. Basically it sounds like I just need to say...go with another lender, or we cancel. The problem is, he is *able* to secure other financing, but just not from this bank. So, would this be considered "inablity to perform" if he doesn't seek additional/alternate financing?

Thank you!

Oh...and yes, the bank *will* make the loan, just not for the amount the buyer needs. So, the buyer would have to make up the difference.

If you want to send me an email with more info (ie address, price, etc.) , I'll be able to get a better opinion on this. Plus, I'd like to offer you help in selling it to someone else (and No I'm not after your listing, I just want to help)

Up to you.

Use the contact form on my site below if you're interested.

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Search Homes for Sale in SAN DIEGO and other San Diego Real Estate via the San Diego MLS.

No he performed, according to what you said above. But after reading your second question it changes.
If the bank will make the loan regardless of the appraisal being less than contract price, then he would be obligated to make up the difference. Example: If he was financing 80% of $300,000 and the appraisal valued the home at $250,000. The lender would finance 80% of $250,000 (not the contract price). The buyer would have to make up the difference. Sucks for the buyer. You should be able to make a claim on his escrow, but then the sale of your home would be delayed until the courts resolve the problem. In my area you would be talking 6-8 months for a court date.
You may want to talk to a lawyer, just to be safe. Contracts may stipulate different conditions in your state. Although, it does seem that the best thing would be to find another buyer. San Diego would be better suited to help you with your problem. Maybe he could find a better buyer.
Good luck.

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Brevard MLS
Satellite Beach Real Estate Brevard MLS
Advanced Brevard MLS

Well, it makes me *feel* better knowing that. But, you are right, I don't want to tie up my property for 6-8months over a nominal deposit. Better just to find another buyer!! And...

We're working on that one!

Kyle, You are a knowledge bank! And yes, it is very similar here in California. BUT like you said, Sometimes it's better to not waist your time dealing with that stuff and just getting a better buyer! I showed the property yesterday. It was a very very nice property for the area! I don't think she'll have a hard time getting another buyer (especially if she can wait until summer time!! )

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Search Homes for Sale in SAN DIEGO and other San Diego Real Estate via the San Diego MLS.

Yeah, I agree. Make one last offer to the buyer, then kick him out!

I don't like refi appraisals, but if it has been verified by a purchase appraisal, then you should be good to go. If you got 2 appraisals for the same amount, I'm certain that you have the value of the property.

If you have spare time, you could complain about the other appraiser, but it wouldn't get you anywhere.

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Richmond Realtor

Richmond Real Estate Investor Association REIA