Home Buying in Dublin>Question Details

rgabula, Home Buyer in Dublin, CA

Apprisal lower than seller price for a new home.

Asked by rgabula, Dublin, CA Wed May 29, 2013

Our apprisal for a newly constructed home came 10k less than the seller price. We have already agreed to increase the payment by 3500$ earlier before the apprisal came because of the demand from underwriter in the middle of the escrow. Ours is a fha loan with 5 year ARM. My question is that if we are unable to meet the extra 10k in case the seller is not ready to negotiate.Will we get back the 3.5% amount of sales price we deposited for the escrow. I believe we are not at fault and we are still ready to pay the amount we promised during the contract sign and also the extra 3500$ we were asked to submit. Can some one help ? Thanks in advance .

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Negotiate that down. You have a FHA loan which typically you should have a right to your deposit if all else fails but they are now stuck with a FHA appraisal that they can not get a penny more for from any other FHA buyer.
Now - they can take another offer from a conventional or all cash buyer but they should disclose to the new buyer you backed out because of appraisal.
I would demand they come down in price because their lender with their appraiser did not see the value. But (again) if you loaded that house with upgrades that is a whole other story and chapter.
Bottom line is you should always use a Realtor when buying new constructions to handle these things for you.
1 vote Thank Flag Link Wed May 29, 2013
Do you have a realtor representing you? your real estate agent should be able to answer your question.
If not, you need to review your purchase contract when is the time to remove all the loan contingency. Usually it may be a chance to lose your deposit if you didn't close loan after you sign to remove all loan contingency. Other case is your seller is a very nice person.
1 vote Thank Flag Link Wed May 29, 2013
You may want to check the contract since many of the builders in Dublin have No Appraisal Contingency. Which means that even if the property does not appraise, you will need to buy it.

I wonder which one you are buying. I have registered many buyers at all the builders in Dublin. Standard Pacific told me that they have never had any appraisal issues especially if a buyer goes through their lender, but they said that even with the buyers own lenders, they had no issues yet. I guess there is always a first time.

The prices in each release have been going up $25-$35K which is almost every 2-3 weeks so the appraisers are having a hard time keeping up with this fast a pace.

Make sure you read the contract or ask them about the appraisal contingency. If there is no appraisal contingency then I am sure there is a loan contingency that you could hold on to and back out, especially if you don't have the additional $10K to make up the difference.

Did you take an agent with you to register at the new homes? If you did, please talk to your agent and see if they can advice you. It is always a good idea to have an agent when going to buy a new home from a builder. It does not cost you anything and your agent will get paid from the builder. You can get a lot of valuable information from your agent. The sales people are working for the builder and they are not looking out for your best interest.

Hope this helps.

Meena Gujral
Achievers Realty
1 vote Thank Flag Link Wed May 29, 2013
negotiate the purchase price down to the appraised price. if you allow it, the appraisal can become part of the disclosures the seller has to show other orospective buyers, so you have the upper hand.
0 votes Thank Flag Link Wed May 29, 2013
Not sure I understand why your underwriter wants you to increase the down payment by $3500, but in general terms many of the new home builders today require the buyer to bring in the cash to make up any shortfall should the property not appraise at the adjusted sales price (base price + upgrades). Having not read your contract specifically, I would advise you to review what you agreed to. If you did indeed agree to bring in more cash in the event the property does not appraise at the adjusted sales price, then you might be contractually obligated to do so.

You may want to have an attorney review your contract and your options in this event.

Here is more information about appraisal contingencies:


Best of luck!

Doug Buenz
The 680 Group at Alain Pinel Realtors
(925) 463-2000
Web Reference: http://www.680homes.com/
0 votes Thank Flag Link Wed May 29, 2013
Was this the builder's lender? Usually, if it's the builder's lender, they'll work with you. FHA also used to have restrictions on a buyer not being able to pay more than the appraised price, not sure if that still exists. You should be having this conversation with your lender, your REALTOR and the builder's representative. Everyone would like to find a solution. Good luck.
Web Reference: http://www.sunilsethi.com
0 votes Thank Flag Link Wed May 29, 2013
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