Bobbie Files

Hi We3,

All FHA / VA loan purchasers REQUIRE an addendum to the contract that reads something similar to:

"Buyer shall not be obligated to complete the purchase of the Property or incur any penalty or forfeiture of the
Earnest Money Deposit or other down payment, or otherwise be obligated to purchase the Property, if: (a) for a VA loan, the Purchase Price exceeds the reasonable value of the Property established by the VA Certificate of Reasonable Value or VA appraisal; or (b) for an FHA loan, the Purchase Price exceeds the appraised value of the Property (excluding closing costs) established by the FHA appraisal. Buyer shall, however, have the right to complete the sale without regard to the amount of the appraised valuation made by the applicable FHA or the VA. The appraised valuation is used to determine the maximum loan that FHA will insure or VA will guarantee. Neither FHA nor the VA warrants the value or condition of the Property. Buyer should satisfy himself/herself that the price and condition of the Property are acceptable. Buyer acknowledges that an FHA/VA appraisal does not constitute a property inspection."

Your mortgage professional or your real estate agent should have had the VA Addendum incorporated into your purchase contract. The seller has the right to either A.) Lower the sale price to the appraised amount or B.) refusing to and refunding you your deposits.

If the seller chooses option A the contract gets revised without the need for an additional appraisal or inspection.

I hope this helps and best of luck! - Fri Aug 28 2009, 04:14