Can You Still Negotiate After an Appraisal?

Appraisers take detailed looks at home electric and gas systems.

Appraisers take detailed looks at home electric and gas systems.

The home appraisal happens after all the contract haggling and negotiations come to an end and an agreement is made on the agreed sale price. New discoveries after the contract signing, however, sometimes allow the buyer the chance to reopen negotiations on the sale price and other contract terms. When the appraisal lists a home value failing to match the sales price or home inspectors find damages, both buyer and seller have the option for re-negotiations -- provided the sales agreement specifically identifies these contingencies as points for continued negotiations.

Comparable Sales Problems

Appraisers made a determination of the market value of a property. Residential appraisers use recent comparable sales as a basis for the home's market value. When the neighborhood fails to have any recent comparable sales, this creates problems for the appraiser. Official guidelines define "recent" as homes closing within a certain time period for consideration as comparable sales. The sales price might match to older comparable sales, but fail to find support from a sale within the guideline period. When the final appraisal report lists a price lower than the sale price, this mismatch allows the buyer to renegotiate the home's sale price.

Non-Conforming Sales

Historic homes and houses featuring unusual architectural features, such as geodesic domes, also offer unique challenges for appraisers. These homes typically fail to match the guidelines for comparable sales, and make it difficult for the appraiser to locate qualified comparable sales of like properties. The differences may result in an appraisal property value different from the sale price as a result of the non-conforming sales. This price difference provides grounds for the seller to request a second opinion from another appraiser.

Inspections

An appraiser looks at the property as a whole to determine the worth. Home inspectors examine the home in detail. The roof, electrical and plumbing systems, and heating systems all undergo close examination by inspectors. Even with an appraisal matching the sale price, the buyer can re-open price discussions when the home inspection finds major problems. Asbestos requiring removal, faulty plumbing or electric, issues with water drainage and roof damage mean major costs to repair or replace. The buyers have the option to approach the sellers for the funds to make the repairs or request the buyer make the repairs before the escrow closes. These negotiations sometimes require both parties to contribute to the repair costs, even after a favorable appraisal report.

Title Clouds

Lenders require borrowers to purchase a title report for the property. Buyers paying cash need not purchase title services, but the research report provides valuable information about the legal ownership and property boundaries. When a title report shows problems, known in the industry as a cloud on the title, buyers have the option of re-opening negotiations with the seller. Easements set aside land for utility use and title reports map these areas on the property. A buyer planning to build a garage on an area reserved as an easement has an incentive to renegotiate the home price, even when an appraisal report confirmed the value of the property matches with the sale price.

About the Author

*I have written chapters and articles for Oxford and Harvard University Presses, ABC-CLIO, and others. Arcadia Press published two of my local history texts and I have also written for numerous "article sites," including Pagewise in 2002. My "How to become a...real estate agent" is available as an online text from a Canadian publisher. *I taught writing courses at a branch campus of Indiana University. *I held a California real estate license and have remodeled four of my own homes and advised others on financing homes, repairing credit to qualify for loans, and managing construction (including meeting local, state, and federal regulations for restoration and development grants). *I served as an AmeriCorps*VISTA volunteer and wrote nearly $75,000 in small education grants (under $1,000). *My travels include frequent road trips in Canada, Mexico, U.S., and Europe. I attended school at Cambridge University and used this as a base to explore the UK and Europe.

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