Appraisal completed, results in and 14% in offer price NOW WHAT

[Ben Kevan]

I'm nearing the end of my first deal (which has had PLENTY of bumps in the road). The latest bump is the completed appraisal.

My offer price of 65,000 has been sun-setted by an appraisal that came in at 57,000.

I'm nearing my up front capital expenditures, so I'd obviously not pay the difference. Nor would I want to pay a 14% premium on a property.

I haven't heard from the seller, but the bank as told me they send them the appraisal and the news. I can't expect the appraiser to go back on their word, but imagine they have a 3% valuation change allowance or something (although I'm not certain).

I hope the appraisal doesn't make the deal go south, but how can I word an email to the seller without further adding fuel to the fire (i'm sure he's livid at the appraiser).

So far I've come up with:

What do you think this dreaded email should say? (btw I'm very happy it came in low, I just don't want it to make my first deal go bust, since I've spend money on inspections, deposit for lending to cover appraisal fees etc).

:woohoo:

[J Scott]

Without having some additional information, this is a hard question to answer...

Is this a private seller? Are either of you represented by licensed agents?

Does your contract have an appraisal contingency? What does it say with respect to what happens when an appraisal comes in low?

How desperate is the seller? What is his payoff amount on the property? What condition is the property in? Is it listed for sale publicly or was this a private deal? How quickly do you think the seller could find another buyer at either of those prices?

How badly do you want the property? If the appraisal came in low, what makes you think it's worth the $65K you agreed to buy it for?

What is your exit strategy with the property? Are you planning to flip it? If so, remember that your buyer will likely need an appraisal as well, and if that comes in low, they'll ask you to eat the difference.

Or are you planning to hold it? If so, perhaps the seller can hold a second and let you pay off the difference with cash flow once you get a renter in there.

If you can provide more info, perhaps you'll get some feedback on how to proceed...