Wishing you the best. Magda
You are not a victim of anything more than being a customer in the real estate market in Florida. The inventory of foreclosures and short sales has cause the market to be completely unpredictable. This issue has nothing to do with the HomePath program, it has to do with the Florida market.
Your contract should allow you to get your deposit money back because you will be denied financing based on that appraised value. If you decide that you still want the property at that price (which I don't recommend) then I would suggest a HomePath loan. The HomePath loan does not require an appraisal. You could actual get a loan at 85% of $71K through the HomePath program. Again, I don't recommend it knowing the appraised value. However, I have known many investors who will still purchase a property knowing that value is low simply because of the cashflow opportunities.
Do a little research about the HomePath mortgage program. It is a great program for investors. As with any real estate transaction, you should always do your own due diligence to make sure you know what you are buying.
I just had the same thing happen to me, but I was the seller instead of the buyer. We got a legitimate offer on the house and then the appraisal came in $75,000 lower than the agreed upon price. My realtor felt the appraisal was very badly done, as did I, so we sent a rebuttal to the appraiser and the bank in an attempt to get a reconsideration of value. The effort was unsuccessful and we had to cancel the transaction and the buyer received their deposit back in full. We had already dropped the price by almost $100,000 (original asking price was $399,999) and the appraisal still came in that low. If the buyer won't make up the difference in cash or the seller won't reduce the price, or a combination of the two, the deal just has to be cancelled and the buyer released from their commitment.
Now Luis, it looks like you are doing this without a Realtor. Not a good Idea.
its a horrible idea!!!!!
Not granted there are good Realtors and less good ones, but a good one can really help.
What to do! Well You need a Realtor, they will cost you nothing (or should) and they can keep you out of trouble. You need to submit appraisal to bank (Bank should have ordered in first place) and get the rejection
so you can walk (are you in the time allowed?)
Luis, Realtors do what you are trying to do EVERY DAY! They know the ropes, get one NOW!
Luis, if you where climbing a Mountain, you know ropes and stuff, would you want to do this alone or might you want to buddy up with a climber with a lot of climbing experience. Sure you might fall, but the chance is
a lot less, and if you fall, you might have have a rope attached to save your fanny.
YOU should never be trying to buy a $50,000 home for 71K - no no no. It's a 40%+ miss - you should never be over a 5% miss max and in this market your first offer should be UNDER market price each and every time in hopes to catch a deal.
Now, I am sorry about the fussing but I hate to see people get jerked around as it looks like you are getting.
I was born in Hollywood some 62 years ago (South Broward High 1966) and have many friends there if you need a Realtor. Just Call me.
If your appraisal came in at 50k, the bank will not loan you more than that. The whole purpose of the appraisal is for the bank to know the value of the home so they can make sure that they aren't lending you too much money.
The bank in your case will deny the loan based on the appraisal.
Apparently you have a mortgage contingency in your contract, so you should be protected.
The lender will not lend you more money than the property is worth, therefore you can be released from the contract and get your deposit back. Otherwise the seller would need to come down in price.
Realize that real estate is not a science. Maybe the appraisal is wrong - it happens all the time. Are you working with a realtor? What do they estimate the value to be? If it is higher than the appraisal, perhaps they can challenge the appraisal. Good luck.
1 pay out of pocket more than the place is worth.
2 have the seller agree to take the appraised price only
3 walk away because you can not finance the $71k price.
2 or 3 are the only ones I would consider trying.
You can not obtain $71k worth of financing. That means your financing contingency was met.
I keep reading that appraisals are coming in lower than people (sellers, realtors) expect. It appears the appraisers win in this game. If it is a fha loan the value sticks to the property for several months.
Either the appraiser has to appraise the property for a given price (so the bank will lend) or the seller has to drop prices. That is the current reality we live with.