Home Buying in McKinney>Question Details

Kj, Home Buyer in McKinney, TX

If an appraisal comes back less that the contract amount, is the seller obligated to lower his price to match the appraisal?

Asked by Kj, McKinney, TX Mon Jun 21, 2010

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RJ Avery’s answer
KJ,

if the appraisal comes back to low the whole contract is basically up for negotiation again. the seller is not obligated to drop there price and neither is the buyer obligated to bring more money. if an agreement cannot be reached then EM will be given back to the buyer in most cases....

make sure your buyers agent is running comps before you submit an offer, appraisals are definitely an issue right now but not one that cant be avoided by doing your homework

thanks
RJ
214-682-0598
1 vote Thank Flag Link Mon Jun 21, 2010
No. Buyer can terminate the contract or their lender would require the shortage be made up in cash.
Best of luck
Helen Karuba
0 votes Thank Flag Link Mon Jun 21, 2010
McKinney, Texas has a few neighborhoods that are still saturated with available homes at higher numbers than actual sales in this past quarter of 2010. With all the positive press about the economy making sellers believe it's okay to go back up on their asking prices, and with some listing agents being interested in growing their listing inventory, you can get into a situation where a home is listed above the comparative sales being used by the appraisers to determine the value of the home. The luxury markets are an easy place for this to happen this year. Neither party is under any obligation to renegotiate the sale based upon the appraisal value. Both are free to walk away or negotiate it out. Typically, the buyer wants the house and the seller wants to sell, so it would just be an obstacle to be worked through.

I've never encountered a problem with the appraisal value on a McKinney, TX listing in the decade that I've been a Collin County, TX Realtor. In fact, the only two appraisals that did not come back at or above contract price during that time were both homes that were adjacent to a neighborhood amenity (greenbelt on one home and water feature on the other), where the appraiser and I disagreed on the value to be applied to the neighborhood amenity and not regarding the value of the home itself.

Keep the listing price based upon the last 90 day actual sale comps, which are what the Appraiser will be using, and you can pretty easily avoid this situation entirely.

Have a blessed day!
Ronda
0 votes Thank Flag Link Mon Jun 21, 2010
You might also want to call the appraisor and find out what his numbers were based on. Sometimes you can get it adjusted. If not and it seems that the appraisal was off see if you can get the lender to agree to another appraisal.
0 votes Thank Flag Link Mon Jun 21, 2010
Governed by the terms and conditions of the executed sales agreement between buyer and seller. However if listing agent over priced the home UP to buyers agent PRIOR to submitting a sales offer review all comp's and etc determine what works best for you as a buyer.

Seller if he owes more than house is worth might not be able sell the home based on appraised value .

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Mon Jun 21, 2010
The seller is not obligated but in most cases will. In a hot market this did happen from time to time and was not an issue. But in today's market everybody wants a bargain. Your contract states that the house needs to have a satisfactory appraisal so in reality it will be hard for him to sell this to somebody else for his current price if the home is not appraising out. Granted if another buyer comes along and orders a new appraisal the home may magically appraise for the purchase price. This happens a good percentage of the time.

If you were my client I would ask for a reduction in the purchase price to match the appraised value. You may even try to ask for more depending on the circumstances. When you are renegotiating the purchase price make sure you attach a copy of the appraisal so the seller and his agent can see the data you have.

Good luck with this purchase and in the end I think you will end up saving some money because of the lower appraisal. Also save that appraisal to possibly dispute your property taxes next year.

Good luck to you.
0 votes Thank Flag Link Mon Jun 21, 2010
Not at all.................. this is becoming a fairly regular occurance in our current real estate market, making in critical that homes are priced as a reflection of the most recent local market activity.

Your level of motivation to sell should determine your willingness to make further concessions! Our recommendation is to try to get the buyer to contribute additional money as well.

Good luck

Bill
0 votes Thank Flag Link Mon Jun 21, 2010
Unfortunately the sellers are not obligated, however if you want the property-- you can try to renegotiate, add more down, ask for another appraisal--sometimes it works, others not, review the appraisal for possible errors, or simply walk away--Your agent can best advise as it relates to your specific situation.
0 votes Thank Flag Link Mon Jun 21, 2010
no, they aren't obligated. It's back to the negotiating table. How much do you want the house and how baclyh do they want/need to sell.
Good Luck
0 votes Thank Flag Link Mon Jun 21, 2010
No, but depending on the terms of the contract, the buyer is not required to purchase and earnest money is refundable. I'd suggest contacting a real estate attorney if there are issues resolving this.

Good luck!

Andrea Brooks
Keller Williams
469-450-1326
0 votes Thank Flag Link Mon Jun 21, 2010
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