When the real estate market is hot, sellers get upset when the mortgage loan appraiser comes in too low. And when the market is slow, potential buyers (and sellers) object to the low value which the appraiser places on the house.

You plan to purchase a condominium unit, and enter into a contract with your seller to pay $500,000. You give the agent $10,000 as the "good faith deposit," to be held in escrow until settlement takes place.

Because this is not a single family house, and the major structural systems are in the control of the condominium association, you decide not to make the contract contingent on a home inspection.

You plan to obtain a 90 percent loan ($450,000) and put down the difference of $50,000 (plus closing costs) in cash. Your lender has advised you that you will qualify for such a mortgage loan, but that the availability of the loan is contingent upon a satisfactory appraisal.

You ask your real estate agent whether you should include a contingency for financing in the sales contract. The agent tells you that other units in the area -- and indeed in the same complex -- have sold for $500,000 or above, and that there should be no problem with the appraisal.

In reliance on these statements, and because you really want the unit, you do not include a financing contingency.

Your lender obtains an appraisal, and it comes in at only $460,000. What rights do you have?

Since you opted not to include the contingency for obtaining a mortgage, you may be stuck. Your lender will still lend you 90 percent -- but it will be based on the appraised value, not the contract price.

This means that although you may have to pay the full $500,000 for the unit, you will only get a loan of $414,000 and instead of paying $50,000 in cash for the difference, now you have to cough up $86,000 -- whether you have this kind of money or not.

There are several steps which you should take.

First, talk to the Seller. Even though there are real estate agents involved, I would try to communicate directly with the Seller, and not go through the various intermediaries. Explain that the appraisal came in very low, and you just cannot afford to put up the cash difference. While you are obviously reluctant to lose your $10,000 deposit, that may be the only alternative.

Your Seller recognizes that this now a slow real estate market. Your $10,000 deposit -- which by the way will most likely have to be split with the agents -- will not go too far. The Seller needs the sales proceeds in order to purchase another property.

Thus, you may be able to negotiate a lower price with the Seller. My definition of a dispute settlement is where both parties walk away unhappy, but nevertheless walk away. Perhaps you can agree to split the difference between the contract price and the appraised value; this arrangement would be consistent with my definition.

You should also ask to obtain a complete copy of the appraisal report. Perhaps the appraiser did not fully do his homework. Did he physically inspect the property? Are the comparables which were used appropriate? Is the appraiser licensed in the jurisdiction where your unit is located, and does the appraiser know and understand the neighborhood conditions?

Beverly Bayer, a member of the Society of Real Estate Appraisers, recently wrote an article for Working RE Magazine (July 26, 2006) entitled, "Appraisal Form 'Gotcha' Traps (from an appraiser who knows)."

Ms. Bayer writes that "lenders are tired of appraisers slapping together reports with limited research and analysis." She lists a number of "gotcha" traps which lenders are using to catch the most lazy and dishonest appraisers. Such traps include:

• if you report a source and claim no prior sales and there is one: "Gotcha!"

• appraisers should read the purchase contracts to determine if there are any sales concessions that may have an affect on value. "An appraiser who claims to have read the contract, but missed the concessions -- Gotcha!"

• in the form appraisal report which is used, the appraiser is asked to discuss the marketing of the property. The appraiser must address such issues as how long the property was listed, pricing and price changes. "If the contract price is higher than the last list price, (the appraiser) will need to discuss why that happened or -- Gotcha!"

Appraising real estate is not a science. At best, it is an art, and often subject to the subjective interpretations and conclusions of the person retained by the lender to evaluate your condominium unit. Go back to the appraiser and ask him to review his report. Point out any discrepancies, such as three bathrooms instead of the reported two.

This may help. If the appraiser is unwilling to cooperate, ask your lender to get a second opinion from another appraiser.

Finally, you start to blame your real estate agent. She told you that the property was worth $500,000, and you relied on those representations. Can you file suit against her? A recent District of Columbia Court of Appeals case (Carleton v Winter, June 15, 2006) gives us some guidance.

In the Carleton case, a real estate agent recommended a home inspector to a potential buyer. She described the inspector as "great" and "particularly suited for young people who were first-time home buyers ... ."

It turns out that the recommended inspector may not have been as "great" as promised by the agent. But when the Carleton's sued the agent for misrepresentation, the DC Court of Appeals denied their claim, stating:

"Fraudulent misrepresentation requires, inter alia, a false representation as well as knowledge of the falsity ... . There is nothing in the record to show either that these representations by Winter were false or that she knew they were false... . Moreover, we have noted on previous occasions that 'a prophecy or prediction of something which it is merely hoped or expected will occur in the future is not actionable upon its nonoccurrence."

Unless you can prove that your agent falsely and deliberately misrepresented the value of your condominium unit, you do not have a cause of action against that person.

In the final analysis, our potential buyer has no one but himself to blame. He should have insisted on including a financing contingency in the sales contract. I would consider this a form of contributory negligence.