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First appraisal need not be the final word

(ran HH, HN, HS editions)

Question: Our house has been on the market for almost six months. Last month we finally got a purchase offer. It was far below our asking price, but we had no sales activity on our home in six months, so we decided to accept.

The buyers have excellent income and credit, so we expected them to get a mortgage easily. They applied for a loan at their bank. But the appraiser valued our house about $15,000 below the low price they offered us for the house. As a result, they can't get the full mortgage they need.

The realty agent asked them to apply with another lender, but now they are thinking they offered too much for our house. What can we do about this low appraisal, which is killing our home sale? _ Doris W.

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Answer: There is nothing sacred about appraisals. They often are wrong, especially if the appraiser is not very experienced or familiar with the neighborhood.

If your buyers paid for the appraisal, the lender must give them a copy of the appraisal. Ask to see it to determine if the appraiser used truly comparable recent sales prices of similar nearby homes.

If not, your buyers can request a reappraisal. If you have information on recent nearby home sales prices, be sure to provide the details to the appraiser.

Please remember an appraisal is just an educated guess of a property's probable market value. The best evidence of market value is an actual sale between a willing buyer and a willing seller, neither being under pressure to buy or sell.

I have often requested reappraisals and supplied recent comparable home sales prices to the negligent appraisers. The appraisal is usually then miraculously adjusted to make the property's market value come out right. There are now many brand-new appraisers who just passed their license exams, so it is not surprising your buyer received a low appraisal.

Another alternative would be for you to agree to carry back a second mortgage to fill the finance gap caused by the low appraisal.

I recently did this. Rather than argue with the appraiser about a small amount, I agreed to increase the amount of my carryback second mortgage by $2,700, so the sale could close.

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Alternative financing

Question: My spouse and I very much want to buy a home. But we have poor credit caused by unemployment and illness about two years ago. Taking your suggestion to another reader, we tried to pre-qualify for a home loan. So far we have been rejected by four lenders. They all tell us to come back in a few years when our credit report clears up. However, we don't want to wait to buy a home. We have 20 percent for a down payment, but that doesn't seem to help. Any suggestions? _ Vickie H.

Answer: Yes, there are many ways you can buy a home, even if you have bad credit. One is to buy a home with seller financing. Many sellers, especially elderly people, own their homes free and clear. When you present them with a purchase offer providing for a 20 percent down payment and an 80 percent carryback mortgage, they will understand for the first time what an investment that mortgage can be.

Another alternative is to buy a home with an assumable existing mortgage, such as an older VA or FHA home loan. These mortgages can usually be assumed without qualifying. All you have to do is pay the $45 transfer fee.

Still another alternative is to borrow from a lender of last resort, such as a finance company. I recently sold a home to a buyer with a credit problem like yours. She obtained a high interest rate mortgage from a finance company. She plans to keep that loan only a few years until she can refinance when her credit report improves.

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Robert J. Bruss is a nationally syndicated columnist on real estate. Write to him in care of At Home, the Times, P.O. Box 1121, St. Petersburg, FL 33731-1121. Questions of general interest will be answered in the column.

(ran HH, HN, HS editions)

Question: Our house has been on the market for almost six months. Last month we finally got a purchase offer. It was far below our asking price, but we had no sales activity on our home in six months, so we decided to accept.

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