Home Buying in Riverside>Question Details

Lynne, Home Buyer in Riverside, IL

Bank appraisal came up $35K (9%) less than price we agreed upon.What strategies can I use to encourage the seller to lower price to appraisal price?

Asked by Lynne, Riverside, IL Mon Jan 4, 2010

It's risky for me to pay a cent more than appraisal price in a declining market. I love the house & location. Should I pay more? Would it be beneficial for me to appeal the appraisal so I can get a larger loan? What is the protocol in negotiating a new offer? Who does it.... the attorneys or the real estate agent? Supposed to be closing next week. Thanks for your imput.

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Lynn911.com Dallas Realtor’s answer
Simple answer:

No lender will allow any buyer purchase a home overvalued. Listing agent should work with seller notify them of problem in order sale home OR keep it .

Never pay more for anything, unless VIEW ocean, golf course, etc. however approval for a loan would not happen.

National Featured Realtor and Consultant, Texas Mortgage Loan Officer, Credit Repair Lecturer
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Lynn911

http://www.lynn911.com
0 votes Thank Flag Link Tue Jan 5, 2010
Why would you pay more than what the house appraised for? Even though you love this house, you should be paying market value for the home, not above market value. This is not a market where you need to do that nor should you do that. Once that appraisal information is out there, the seller needs to adjust accordingly.

Your best bet is to renegotiate the contract based on the appraised value. Either side could have another appraisal done to confirm either the sale price or the appraisal price. Chances are the second appraisal will come in around the same price as the first appraisal. I have seen where the second appraisal has been lower than the first as well.

Bill is right regarding the lender. It's doubtful that the lender will approve the loan. Lenders are getting tighter and tighter on loans. They are only going to loan you a certain amount. You would have to come up with the difference in cash to keep the deal together in order to close next week.

In Illinois your contract should have a stipulation in the financing section stating something to the effect that the property needs to appraise at or higher than the purchase price. Appraising lower is a way to opt out of the deal .The reality is if the seller wants to close this deal they are going to need to reduce the purchase price. Your attorney should handle this part for you.
0 votes Thank Flag Link Tue Jan 5, 2010
Lynne,

You lender is unlikely going to be willing to finance this property. The fact of the matter is this is a significant amount....one that the seller is going to have to accept either on this offer or the next if the numbers do not come in.

Banks are doing everthing they can to take a more conservative position on lending.....requesting a second appraisal is a possibility but before taking that route it may be beneficial to have a discussion with your lender to see how they will deal with a second appraisal that comes in at the sale price.....and if possible, get it in writing.

Best wishes,
The Eckler team
0 votes Thank Flag Link Tue Jan 5, 2010
Hi Lynne,
In most cases where I have had an appraisal to come in lower than the accepted price on the purchase contract the seller has re-negotiated the price. At times, they will request a second appraisal just to be able to compare, however, they usually come in pretty close to whatever the 1st one came in at. You should notify both your real estate agent and your attorney and provide them both with a copy of your appraisal. Typically, your attorney will do the re-negotiations with the seller's attorney for you, however, there are times when the real estate agents are involved. You should never pay more than what a home is worth, especially in a declining market. The seller understands that this is not something you have control over and should be willing to negotiate, however, be ware, that if they come down on the price and they were contributing anything to closing costs, they will probably try to renegotiate that end of the bargain as well. Good luck. Hope that was helpful!

Cecelia Marlow
PanAmerican Mortgage, LLC
Senior Mortgage Consultant
773-782-6000
0 votes Thank Flag Link Mon Jan 4, 2010
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