HOWEVER, I have had a few closings where the bank agreed to the further loss, and reduced the price to the appraised value. It completely depends on the bank. Unfortunately this is one thing that is completely out of our hands. I hope this helps! Good Luck!
We have a clause in our contract which allows us to back out, thank god. Though we sill pumped 7 months time, and over $800 into appraisals and inspections.
Hopefully this will turn in our favor and we'll get our dream home for $20,000 less than we anticipated.
In Florida, the short sale addendum and contract addresses the "subject to lender approval"--that is for the bank of the seller.
However, there is a financing contingency a normal florida contract that means the sale is "contingent" on the buyer's ability to finance according to the terms in the contract. If the appraisal came in low, that is all the money your bank is going to lend, and it also means that you cannot meat the financial obligations you agreed to in the sale contract. Normally the price is negotiated to the value of the appraisal--one of the things that has cleared up since the 2004-5-6 mess is that banks order appraisals from a clearing house and have no input as to which appraiser they get. This eliminates an appraisal being done that has a "conflict of interest" on behalf of either the buyer or the seller.
I have, however seen deals fall apart because the seller nor the buyer are able to make up the difference even if they agree with the appraisal--the selling bank doesn't have to lower the price.
I hope this helps,
Myke Triebold, GRI, LMC
Not necessarily. Before the seller's lender/investor approved the short sale, they would have had either a Broker's Price Opinion (BPO) or Appraisal done to get current market value. Now that the appraisal has come in lower, the listing agent can go back to them asking them to lower the price. Some lenders/investors will and some won't . It doesn't hurt to have the listing agent ask though. Worse case, they say 'no'. They may split the difference, lower to appraisal, or again, keep the price as already agreed upon. If they keep the price 'as is', you can pay the difference (if your financing allows you to) or cancel contract (if you have an appraisal contingency in effect).
If the lender is not willing to give any credits but you really love the house and would like to still buy it at the current contract price regardless of the appraisal report, then that's your decision. The appraisal report can not judge the personal value of the property to you.
Best of luck,
Broker Associate, Paragon Real Estate Group
All data from sources deemed reliable but subject to error and omission, and not warranted. CA DRE 01844627
It's frustrating because there is no way to report this behavior. Sales in this neighborhood are consistently $100,000 and the ONE sale for $450,000 was to an out of state buyer from NY who thought that the price was a deal! It is the only sale for that amount in the neighborhood and it should be excluded as an outlier, but the bank won't be reasonable. Now they are telling the seller to do a DIL or have a foreclosure - this from the bank's "forclosure prevention" division!
Bottom line, without some regulations or oversight by Congress, banks will do what they want!
You should definitely give it a try. I think the bank should cooperate, if the appraisal is reasonable. The short sale lender should have a BPO, which might be different from your purchase price.
If the bank doesnâ€™t consider your request, then you won't be able to get financing and they would lose a buyer. If they have back-up offers lined up, then they may be less flexible.
Good luck to you! I know short sales are difficult, so be patientâ€¦
If you have any questions, please feel free to contact me directly.
Dana De Kleyn, Realtor
Dale Sorensen Real Estate, Inc.
Please see my blog for tips on buying ashort sale
Most of the time the lender(s) approving a short sale have a significantly lower quality appraisal done by a Realtor, not a fully licensed appraiser.
So if your lender's appraiser came up with a lower value then you absolutely should not pay more than that price. Ask your lender to email a copy of the appraisal and forward it to your agent and ask her to send to the listing and and to the lender(s) approving the short sale.
The lender(s) should absolutely give more weight to a current appraisal done by a licensed appraiser rather a mere $40 BPO done by a possibly incompetent Realtor.
Otherwise... walk away and find a true bargain, a bank owned foreclosure.
All the best,
It really depends on the situation. Most times the REO lender has already received a handful of BPO's (Broker Price Opinions) or the equivalent of appraisals on the property and they've tracked that and updated them several times to get a feel for the actual value. If the buyer's lender orders an appraisal and it comes back well below all of their figures then no, they may not reduce the price. Of course then your lender is going to be hesitant to lend above the figure they received and suddenly you're in a bit of a pickle. It'll then come down to how large of a gap you'll have to make up to seal the deal, what's your current loan to value ratio and how much do you really want this house?