In the Denver Metro area, realtors and appraisers say bidding wars may be driving up the selling price, but appraisals are frequently coming in much lower. Unlike in the past, though, sellers are less inclined to take less.

“We agreed on it. We were under contract,” said Melissa Abels, who had already started packing her bags to move after signing the contact on her dream home in Parker. ”Our loan was approved. We were good to go, and sort of the last step was getting the house appraised.”

But that's when she got the bad news.

The home appraised for $12,000 less than the agreed sale price.

“I thought, 'Oh my Gosh, we’re going to have to get our apartment back. Where are we going to live if this doesn’t work?'"

It is a common problem lately in the Denver Metro area, which has seen a decrease in housing inventory and an increase in demand.

"There are not enough houses, especially more affordable homes," said Kelly Moye with the Colorado association of realtors. "First time homebuyers who don't have a lot of cash are hit the hardest."

Moye said bidding wars are often driving up home prices, but appraisals have lagged behind.

In the past, she said, sellers would have been forced to lower the sale price, but not as much anymore.

"They are holding out knowing there will be someone who is willing to make up the difference," said Moye.

Some realtors are recommending buyers short on cash to lower their down payment enough to make up the difference. The catch? They might be required to pay mortgage insurance.

"More importantly, you're making sure your own client knows what the true values of that neighborhood are," said Moye.

If an appraisal comes in low, the buyer can:

Negotiate a lower sales price

Dispute the appraisal with the original lender

Agree to pay cash for the difference

Appraisers are begging homeowners not to shoot the messenger.

"We are always the bad guy, and I’m OK with that," said Warren Boizot, III, a longtime appraiser in the Denver Metro area. "I deal in factual data. I don’t deal in speculation."

Boizot said that in the last two years, he has seen as many as 8 out of 10 homes in this area appraise for less than their sales price, and it reminds him a little of the 2008 housing bubble.

"It just scares me, though, because sometimes I see people getting anxious and wanting to go a little faster than I am comfortable with," said Boizot.

He said the number one thing people can do to make sure they get a fair appraisal is provide information about recent comparable home sales.

"You need to give me comparables that I can use that are OK with the lender within their guidelines that support [the sales price]," said Boizot.

Abels said she and her Realtor, her mother Julie Abels, managed to reach a compromise with the seller of her home, but she will have to bring extra cash to the table.

“Yesterday at 3 p.m., we got the call and that they approved it," she said with a smile.

Now, she just hopes that the house value will keep going up, so that it will eventually be worth what she is paying.

"We’re hoping we’ll get that back in investments later on after we own the house for a while," she said.

How to protect yourself if you're a buyer:

Request that the appraiser have a residential appraiser certification and a professional designation.

Meet the appraiser when he or she is inspecting the home and share your information about anything that might affect the comps.

If you are a seller:

Get an appraisal before you list a home. Search for a qualified appraiser in your area here.

Give the appraiser relevant, recent comps.

Question or dispute a low appraisal

Click here for more information from Appraisal Institute about low appraisals.

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