Sellers Stand Firm on Desired Price
Q: " I think I handled this correctly but I wanted to get your thoughts. I was hired by a good AMC client to appraise a house in the same neighborhood where I have lived for years. I also have done many appraisals in this neighborhood. The report is for a purchase money loan. The house is under contract for $450,000. There were several current sales, and good comps. After all my adjustments, my value was $452,500. I turned the report into the AMC and everything was fine until I got my first call from the buyer. It was hard for me to figure out exactly what the guy was saying because he was screaming at me, but, basically, he said my appraised value was too high.
The buyer claims the seller refused to negotiate down the sale price to a number that was “reasonable”. He says $450,000 is way more than what the house is worth because it is not in the better school district, because the bathrooms and kitchens have not been updated, and because it backs up to a busy street. I took all of those factors into account when I arrived at my opinion of value. In any event this guy says he had a “plan” in place with both agents, his agent and the listing agent. The buyer would make the $450,000 offer “knowing” that the appraisal would come in lower. His agent would then approach the listing agent and say the buyer would walk if the seller did not reduce his price. The listing agent would convince the seller that it was better to reduce the price than to relist. The seller would reduce the price and everyone would walk away happy. Now my appraisal ruined the plan, so I have to “fix” this problem ASAP.
I know I should not have really said anything to this guy, but I could not believe what I was hearing. Since when is the appraisal supposed to be used as a negotiating tool? I also had a hard time believing the listing agent was in on some sort of scheme to get the seller to take less money. I tried to make my points, but this guy would not really let me get a word in, anyway.
Finally, I just talked louder than he did and said I could not take any instruction from him because he was not my client. I told him to call the lender. If they wanted me to reconsider my value, I would be contacted with that request. He hung up the phone and I have not heard from him again. Is there anything I should be doing right now? I was thinking I should call the listing agent and tell him what this guy was saying about their “plan” to work together to force the seller to take less money. What do you think?
A: Actually, this scenario has become somewhat commonplace. We understand that in many parts of the country, the inventory of homes for sale is quite low. Sellers know that potential buyers don’t have many options. As a result, sellers are able to stand firm on their desired price. Buyers mistakenly believe that the appraisal is a “tool” for them to use in order to achieve their goals, whatever those might be. That belief can be fueled by an uninformed agent, as well as by the buyer’s opinion that the appraisal is their property because they paid for it.
If the buyer, and/or their agent, try to contact you to demand that you change the report, you can only continue to refer them to the lender. I don’t mean to be the bearer of bad news but you might see a complaint made against you to your State Licensing Board. If that happens, please let us know, so we can help to guide you through that process. * In my opinion, you should not reach out to any of the parties involved in the transaction, including the listing agent. Whether or not the buyer was truthful about any conversations he might have had with the agent really has no bearing on your situation, and I would rather not have you in the middle of someone else’s dispute.
It is possible that the buyer was simply angry about the circumstances and you may never hear of this, again. If that is not the case, please keep in touch.
*Be sure to check with your own E&O provider for help.