Home Buying in 92394>Question Details

Asia Wallace, Home Buyer in 90019

WHEN AN OFFER IS ACCEPTED BY A SELLER BUT IT APPRAISES FOR MUCH LESS, WHAT HAPPENS? WHO PAYS THE DIFFERENCE? DOES THE SELLER HAVE TO DROP THE PRICE?

Asked by Asia Wallace, 90019 Thu Mar 25, 2010

PURCHASE PRICE?

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In most markets that appraisal will stick with the house for several months if a fha appraisal. The seller can decide to ignore it, demand you pay more, or negotiate to take what it will appraise for.

Some areas realtors will say it does not matter. The houses sell above appraisal anyway.
1 vote Thank Flag Link Thu Mar 25, 2010
Hi Asia,

Some good information was given below. However, in this current market I would not count on the Lender allowing the buyer to cover the difference in value. And I could not recommend to a client to consider that option in this current market either. There was a time 3 1/2 years ago at the height of the market that this practice was common. However, keep in mind that values were still trending upward at the time. I would recommend that you request for the seller lower the price to meet current value. Consult with your agent to help you with this process. Good luck!

Matt
1 vote Thank Flag Link Thu Mar 25, 2010
Right now we are running in to this more and more, the appraisal is usually the best estimate of value it directly compares your home to other "Sold" either with an agent or FSBO. So having said that you usually would have a contingency in the contract stating the home must appraise for the price you are paying. So if the seller wants to sell the property they need to meet the appraisal price, however the buyer may also pay the difference if the seller is not willing to meet the appraisal price. But at that point it would be a dead deal and up to the buyer if they would like to continue with the transaction keep in mind this only comes into pay if you have the appraisal contingency
1 vote Thank Flag Link Thu Mar 25, 2010
Hopefully you still have an appraisal contingency in your contract. If you do it offers you leverage to negoitiate a price reduction.

Sometimes the seller will have the appraiser come back and make an adjustment for something they missed.

Time to negotiate (again).
1 vote Thank Flag Link Thu Mar 25, 2010
The seller doesn't have to drop the price, however, if they want to sell their house it is a good idea. I've seen this happen where the seller can't afford to lower the price though since they owe more then the appraised amount. Short sale would be the only way to get the deal moving forward if that was the case and not all sellers are willing or want to do a short sale since their credit is impacted and possibly a balance owed to the bank. Coming up with tens of thousands to close a deal from the sellers side is more often then not, not a go.

The appraisal can also be challenged....I had to send the appraiser comps for my own house since it was unique when I was looking into refinancing.
1 vote Thank Flag Link Thu Mar 25, 2010
This scenario is where your agents negotiating skill come into play.
The seller does not have to change the offer acceptance.

Often you put an amendment in the offer to cover these events.
Check with your agent. If they are worth it, they will work to get the deal closed.

??
Mickee Hernandez
Real Estate Agent / Realtor
Local Specialty: Victorville, Hesperia, Apple Valley
Exit Realty, Blaine Associates
16000 Apple Valley Road, Apple Valley, CA 92307
760-985-7439
http://www.exitmickee.com
Put my Expertise to work for you.
0 votes Thank Flag Link Mon Apr 28, 2014
The seller doesn't have to drop the price, but if they would like to sell their home they should consider it! Time to renegotiate !
0 votes Thank Flag Link Wed Dec 5, 2012
Different things can happen in this situation. I'm seeing Fannie Mae and some Wells Fargo short sales dropping the price to the appraised value, while some other banks are having buyers sign an addendum to come in with the difference prior to offer acceptance. Most regular sellers will lower the price to the appraised value. As a buyer, always negotiate for the appraised value, if the seller wants to sell since appraisals are stuck to a property for several months.
Mei Ling Wang
A Member of the Council of Residential Specialists
DRE# 01893287
AGIO Real Estate, Inc.
Cell # 760-475-0099
0 votes Thank Flag Link Wed Dec 5, 2012
Asia-

If you still have your appraisal contingency option, the simple answer is Negotiate. The seller does not have to drop the price and you dont have to increase. Now the issue is how bad do you want the property, how bad does the seller want to sell and what is your financial situation. A lender will use the lower of the purchase price or appraised value to determine their collateral position. If the appraisal comes in $20k lower than the purchase price the down paymentnmightnhave to be increased by about $20k to maintain the same loan to value ratios.

Good Luck
0 votes Thank Flag Link Thu Dec 9, 2010
The seller doesnt have to lower the price, however if they want the sale to go through, they have to lower the price or the buyer wont be able to get a mortgage, if teh seller is not in a positiion to lower the price, the buyer must decide whether they will come up with teh cash to cover the difference or withdraw from the deal. In teh past the loan officer could ask for the appraisal to be reviewed, but in most cases now, the loan officer cant talk to the appraiser and overly cautious appraisers wont make any changes. goo dluck with working things out.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Thu Mar 25, 2010
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