If the appraisal comes in lower we can't finance the property based on the bid price, we base it on the appraised value. The seller and listing agent should know that.
The best way to go is make sure your realtor has the negotiation skills to handle it when the time comes.
As the experts below have mentioned, make sure that you DON'T waive your appraisal contingency; in this housing market, people are over-bidding on property, so just make sure if you really like a property be prepared to make a very competitive offer, most of the time over asking price.
Home value is determined on recent comps in the surrounding radius; also taken into pricing is the condition of the home ... does it have deferred maintenance? Is it rich with upgrades? Original condition? Location? The appraiser will formulate all these elements to come up with the home value.
Good luck! Happy bidding!
now rememberif the home is really fixed up and your comparables are not you have to alow for that and bid accordingly. Since you will have an appraisal contingence ( you should ) and the home does not appraise for your accepted bid, then you can renegotiate from there. Just as a note, so listing agents are asking for bids, that have NO appraisel contigences, this often happens on the low end and in an expected multiple offer situation. In this case you have to look at how desirable is the home and go from there.
I hope this helps, feel free to contact me with any questions.
As Gerard said " Be sure the contract is contingent upon an appraisal. ".
Ask the Loan Officer to order appraisals ASAP , once you have selected our Lender. Most sellers want the appraisal contingency to be removed within a specific time period.
If you need comps in San Jose or Santa Clara, it would be my pleasure to assist you free without any obligations. Just email me at firstname.lastname@example.org
This is becoming increasingly common - here is a blog post that deals with that specific issue:
Missed It By THAT Much: Top Four Solutions To Low Appraisals
Many factors can affect home value, but bottom line is that home value is often determined by how much buyers are willing to pay for comparable properties in your area. It is possible for the value of the home to come in lower than your bid price and is often the case when a home is over-priced by the seller. In that scenario most contracts allow for two options: 1) Either the seller can lower the price to the appraised value and both parties can proceed with the transaction or 2) The Buyer can terminate the contract in the event the seller will not lower the price.
Hope this helps!
If the value comes in lower then the sales price - ask the seller to reduce the purchase price to the appraised value. If they won't - you can release from the contract and get your deposit back.
Most important - find a competent Realtor in your area to guide you through the process!