Once appraisal comes in, probably lower than purchase price, then the bank will only lend you whatever the appraisal value of the home is.
Seller's are concerned that if for instance the purchase price agreed upon is, let's say $400,000. Then appraisal comes back with a value of $300,000. Will you come out of pocket for the balance of the $100,000 plus the 20 percent you are already having to supply.
This is the reason why your seller is rejecting your offer, he probably does not think his house will appraise for value of purchase price. Did anyone ask you if you would be willing to pay the difference after appraisal value???
As suggested here, you will want to get with your loan officer to ensure that the pre-approval letter you have is properly worded and reflects that you income and credit has been verified. One of the approvals your lender can get you is what is referred to as a DU-Direct Underwriting approval, this would provide you and the seller with your credit scores and other vital information that shows the strength of your offer. Your agent shoudl be able to assist you in obtaining this and properly writing up your offer to reflect the strenght of your offer. As suggested here, you may also wish to provide proof that you do in fact have the 20% downpayment funds available plus and closing cost you would incur. Depending on the type of property you are purchasing and whether you will be making the purchase for investment or as your primary residence, that can make a difference on what you may be required to do with your financing. In today's market , whether it is a regular sale, short sale or foreclosure, the sellers want to ensure that the offer that is accepted is one where it is reasonable to assume that the buyer is a strong buyer and will follow through with the purchase in the shortest amount of time.
Good luck with your home search. If you ahave any further questions please feel free to contact me.
An 80% loan is OK as long as you have the rest covered in the finance part of the contract. Do you have the other 20% between your escrow deposit and what you are bringing to the closing table?
Debbie Albert, PA
Keller Williams Treasure Coast