Home Buying in Newark>Question Details

Francesca Du…, Home Buyer in Bradenton, FL

What I happens if my appraisal comes in higher than the negotiated price.?

Asked by Francesca Duarte, Bradenton, FL Mon Jul 14, 2014

I made an offer on a house over three months ago. The offer was accepted and it had taken over three months due to repairs taking a long time. The property values in the area have gone up since the offer was accepted. I'm having the appraisal next week and I was wondering if the seller can increase the price if the appraisal is higher then the accepted price. I'm a young first time home buyer so everything is very new to me.

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7
It means you have equity in your home! The contract sales price will remain the same.
0 votes Thank Flag Link Mon Sep 22, 2014
You'll be ok. The executed contract states the sales price and seller is tied to it.

Enjoy your new home!
0 votes Thank Flag Link Mon Sep 22, 2014
Nothing happens aside from you feeling good about your purchase. The one exception might be a BPO for a short sale -- in that case the bank may want to shore up their losses and ask for more.

Sounds like time is working in your favor!

Best,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
0 votes Thank Flag Link Mon Sep 22, 2014
No, the seller cannot increase the price of the home if the appraisal comes in higher.
When the home "appraises out", as we say, that means the bank sees the value the buyer is paying. Whether it appraises higher or not doesn't make a difference, and the contract is still binding.

You, the buyer however, will look to reduce the price if the appraisal comes in lower!
You will most likely not be approved for the loan - so there will need to be further negotiations. If the appraisal is lower than the sale price, the sellers will either have to reduce the sale price to match the appraisal, or (if they refuse to do so) you will have to come up with more money if you still want to buy the home.

Good luck!

ps do you have an agent who can explain all of this to you???? It (the process)should have been explained, if not by your agent (assuming you have one), then by the mortgage rep
0 votes Thank Flag Link Sun Sep 21, 2014
And a voice from Florida.
If you have professional representation, you can be confident your offer will prevail.

If the house being purchased is a private sale, auction, or short sale, you may not have the same assurances.

In Florida, it is not uncommon to see a real material difference between the negotiated price and the appraisal value. The goal of every real estate professional is for you to buy real estate with instant equity. In such cases, you should consider a act of real appreciation for your agent. They work hard, on your behalf, to ensure you will have no hesitation referring them to your friends, family and those you work with.

Be aware, both the seller and you the buyer have been properly advised regarding the market value of this property. You already know if you are getting a deal. The appraisal will be the official declaration the party is on your street this week.

Time to give your REALTOR a call to confirm what you have read.
0 votes Thank Flag Link Sun Sep 21, 2014
I agree with Ron, however learned in a class taught by an appraiser that the appraisals done to justify a loan will never reflect much higher than the sales price itself. All they are asked to do is justify the amount of the loan and once they reach that, stop digging for any more. I haven't seen one much over $500 in the past 10 years. You should have no problems and believe me, I doubt if 3 months would really make that much of a difference anyway.
0 votes Thank Flag Link Sun Sep 21, 2014
Rest assured, Francesca,they can not raise the price of the signed contract. It has happened to my clients many times in the past, I am not saying that the appraisal is based on the contract price, but when it does come in higher, its usually by less than $1000 anyways.
0 votes Thank Flag Link Mon Jul 14, 2014
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