this happens sometimes and it's not the end of the world or as dramatic as some think. Just keep poised and focused. At least this is something my clients are ready for regardless of whether I believe the property will appraise or not. So we are ready with options and not dwell on the problem. Do you have a realtor is my first question? If so where is he/she?
If not, we can certainly talk about any recourse you may have based on the structure of the contract.
The short version has already been answered many times over. If it doesn't appraise then either walk away or lower the price to below appraisal (I believe it should be 10% below) for banks now to approve that property. Other options are getting a secondary appraiser to come out to your home. This will delay the process but if you firmly believe based on SOLD COMPS '(0-90 days) you may have a leg to stand on. Beyond this, it's too much to get into. So if you're interested, i can meet with you and represent you, and either A) realistically reassess your asking price, or B) help you find a cash buyer who will not be tied to bank stipulations.
Felix UT- Grad, realtor
"My business is people not Real Estate"
Happy to help anytime.
Dan Burstain, Realtor
JB Goodwin Realtors - serving Austin for 40 years
In short, buyers can walk away from the contract since their lender will not approve the loan.
Susie Kay, RealtorÂ®
GRI, CHMS, SFR
United Real Estate
III Lincoln Centre, 5430 LBJ Freeway #280
Dallas, TX 78240
Servicing your real estate need is my priority!
"Always working for the client, before, during and after the sale"
iPhone in use;
Good luck, Gene Davis "always working for the client, before, during and after the sale": 512-217-0687
1) Have your Realtor contact the Agents of all pending listings similar to your house that may sell at higher prices than current sold comps. Find out when they are expected to close and track their status in MLS. If any close near the time appraisal is completed, send them to lender to be sure they are not missed.
2) Your Realtor can check all recent solds (within past 6 months) and see if any support your sales price. If so, send these comps to the Buyer's lender with detailed explanation (i.e. distance to subject property, similarity in condition, etc). The lender is required to send this information to the appraiser. It is possible the appraiser could have overlooked an important comp and if it gets included, it will raise the appraised price.
Assuming the Buyer is financing the purchase, the contract states Buyer has right to terminate if lender's underwriting guidelines (including appraisal) are not met. In my experience, most Buyers will not walk away from the deal but they will take a lower price. Unfortunately it takes time in a seller's market for the appraisals to catch up to current selling values since they are based on past solds. Best of luck to you!
Tammy DeWitt Le
If the option addendum doesn't have FHA financing it is very possible to get a loan approved for a house that had an appraisal come in lower than the appraised price. You usually can achieve this because of a larger down payment.
The lenders only care if the house is worth enough to cover the value of their loan. They don't specify how much you can pay for a house.
Here is an example
Contract Price Home: $120,000
Appraisal Price of Home: $116,000
Down Payment: $20,000
Loan-to-Value: 86% (meaning the loan is only 86% of the total value of the house)
Contract Addendum interest rate: 5.4%
Actually Interest Rate: 5.2%
Loan Status: Approved
In the example above you couldn't just back out of the contract because you didn't like the appraised value of the home. The buyer would forfeit their earnest money. Unless it was specified that the house couldn't appraise for less than 120,000. Which most people don't state in the contact.
Hope this helps.
The Michael Group
Terms and conditions are based on executed sales agreement
Lynn911 Dallas Realtor & Consultant
Multimillion Dollar Sales Producer
http://www.lynn911.com 100's of Dallas homes listed for sale or lease
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