Some sales fall victim to the misleadingly named "low appraisal," which occurs when an appraiser's opinion of value is less than the agreed-upon sales price. This situation can be a major headache, especially for sellers. If they refuse to reduce the price, the buyer might cancel the sale through an appraisal or financing contingency. But if another deal is then subsequently struck with a backup buyer, the result might be just another low appraisal.
To overcome a low appraisal, the seller must persuade the appraiser to reconsider -- a tall order, rarely accomplished -- or negotiate a price that's acceptable to the buyer. If the property is a foreclosure that's owned by an out-of-state bank, these negotiations can be quite difficult, says Jan Baron, a Realtor at HomeSmart Real Estate in Temecula, Calif.
The solution is "going back and forth, trying to justify the price," Baron says. "Or, the seller is going to have to come down. If it's a bank, that's a big deal. They're going to argue. They're in Dallas or Minnesota, and they have no idea what's happening in California."