Home Buying in 20169>Question Details

Ginger, Home Buyer in 20169

I am purchasing a new home. The appraisal came in lower than the sales price of the home. What options do I have? What should I do?

Asked by Ginger, 20169 Tue Apr 12, 2011

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Did you put in a lot of design upgrades? Can you reduce any of those? Talk with your buyer agent about your options. With out knowing the details of your contract it's hard to say what you can do. I would bet the new home builder wants your sale and they will find a way to make it work. I would play around with the numbers from the design center. They usually have a 50% upcharge on the cost. Best of luck!!
0 votes Thank Flag Link Sat Nov 24, 2012
Do you LOVE this home? Is this the perfect home for you and your family? If you do, you need to determine if this was a quick bank appraisal by an inexperienced or out of area appraiser or was the effort of an experienced LOCAL APPRAISER who is involved with property values in Haymarket ON A DAILY BASIS. Some out of area appraisers lump Haymarket in with the rest of Prince William County and it simply does not have the volume of foreclosures or short sales that exist in other areas and should not be lumped in during the appraisal process. Haymarket is a GREAT place to live and if you can get a better appraisal, perhaps the homeowner would meet you in the middle on price, if you could obtain a more THOROUGH appraisal from a LOCAL APPRAISER. Challenge your lender! If it is new construction, the appraisal should match the sales price, unless you have added so many additional features that the market value doesn't match the additional cost you are adding to the base home price. Chris Anne Cleland is correct - prices in the Haymarket, VA 20169 area are rising month over month, year over year since the bottom in 2998/2009. I hope you are using a Local REALTOR to help you with your transaction. The LOCAL new homes agents here in Haymarket are also very experienced and are top notch to work with through these issues. If you are still concerned, ask to speak with your Agent's Real Estate Broker. They can also assist you through these uneasy waters. I hope you are able to find the support to move forward with your sale because you will never regret the choice to live in Haymarket!
0 votes Thank Flag Link Wed Apr 13, 2011
Most builders, like Toll Brothers, have written in their sales contract you signed that they will not lower the price if appraisal is low, so you may have bring the difference! Or you can try and switch lenders and get another apprisal. Consult your Realtor for guidance.
Web Reference: http://www.SelliongNoVa.com
0 votes Thank Flag Link Tue Apr 12, 2011

New construction homes are always priced higher than resale homes. Think of it as purchasing a new car vs. used car. Of course, one can argue that sometimes resale homes offer more than new construction homes, unlike used cars :-)

A good appraiser should compare new construction homes to new construction homes and resale homes to resale homes.

I hope that you have a good buyer agent because your agent should be your best friend right now in helping you decide the VALUE of the new construction home vs. comparable resale homes in the area.

In the end, it is between you and the seller/builder to agree on the price - unless you are locked into the price by the contract that you have signed with the builder, in which case you have made the decision when you did sign the contract.
0 votes Thank Flag Link Tue Apr 12, 2011
That last answer is TERRIBLE advice. From your zip code of Haymarket, VA I can tell you that prices are absolutely NOT declining. They are stable and actually rising. Just goes to show how local real estate is.
0 votes Thank Flag Link Tue Apr 12, 2011
Hi Ginger,
Wait another year to buy, prices are declining. Good Luck
0 votes Thank Flag Link Tue Apr 12, 2011
Your agent is going to have the best answers for you.... but here goes:

Do you have an appraisal contingency? If so, then perhaps you can get the price lowered - that would be good! Your agent can guide you through this.

If that doesn't work your agent can challenge the appraisal if the two of you feel it is unfair. Any good agent will know the appropriate ways to do this. If you're working with a new home builder - in particular a production builder - I am surprised they aren't handling this for you.

If the appraisal isn't getting changed, and you don't have an appraisal contingency, then the issue goes to how much you have to pay and will you still be able to close. Sometimes if you have the money to pay the difference, it will lower your reserves so much that you might not be able to get financing. If that is the case, and you have a financing contingency, you may be able to get out of the contract without penalty. That's kind of stinky, but it is better than the alternative of having no contingencies and not being able to close, risking your deposit and possibly more if the builder was to sue. Yucky, yucky, yucky.

Good luck!
0 votes Thank Flag Link Tue Apr 12, 2011
At this point you have three choices. First, you can contact the seller and ask that the sales price be reduced to meet the appraised price. If they will not, you can void the deal and get your earnest money back provided it is contingent upon acceptable appraisal. Your third option is to compromise with the seller and meet them somewhere in the middle on the agreed sales price. If you choose this option, you will need to pay the additional amount at closing. Hope this is helpful and good luck
0 votes Thank Flag Link Tue Apr 12, 2011
Hello Ginger

Are you not working with a buyer agent? This should be spelt out in your contract. First, the seller has the option to reduce the sales price to the appraised value. Then you have the option to come up with the difference in cash or void the contract. This is assuming you have the appraisal contingency in force.
0 votes Thank Flag Link Tue Apr 12, 2011
If you are purchasing new construction, which is how I read this, your options may be limited. New construction is unlikely to reduce the sales price unless you are on a VA loan, doing 100% financing. The previous answers definitely cover the scenarios of purchasing a resale from a home owner.
0 votes Thank Flag Link Tue Apr 12, 2011
Or you can pay the difference yourself, or you can ask to split the difference with the seller.
0 votes Thank Flag Link Tue Apr 12, 2011
The first thing you do is ask the seller to reduce the price to the appraised value. If he/she won't do it, you can walk away and get your earnest money deposit back.
0 votes Thank Flag Link Tue Apr 12, 2011
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