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Updated over 11 years ago,
Appraisal just cost us $20k - how to prevent this?
We are near the end of a flip of a higher end home. We got it under contract for $400k - $5k in closing costs, but the buyer's agent was concerned about the appraisal, so we put verbage in the contract that said that we would refund their option and earnest monies if the house did not appraise for $395k+
Well, the appraisal came in today at $376k. Ouch! So, we signed an amendment to lower the price.
The house is worth the $400k, and the buyers were willing to pay it, but the comps were just not good in the last 6 months. The appraiser pulled comps from houses in the same hood that are older, not on the greenbelt like ours and not with a pool. The appraiser makes his adjustments for these things (except for the age), but they just don't adjust to market value.
What would you do to combat this or prevent this situation? Thanks for any feedback!