Hi K.J.
Some Contracts do not give you an "out" if the home does not appraise, especially new construction. If you are using the standard offer to purchase then your realtor should have included the clause, that protects you, since your lender is only going to loan, based on appraised value. At this point you have 3 choices, pay the difference yourself, walk away from the home or get the builder to pay at least a portion, the last of which seems the fairest. I don't know why your realtor does not want to pursue that option, we do it all the time be it a builder or seller of a resale home. Good Luck
Michael

Hello Kj,
I would ask your realtor to review your contract with you with regard to the appraisal contingency. Paying above the appraised value is generally not in your interest. Make sure you understand your options and consequences clearly and then have your buyer's agent negotiate on your behalf. This is a buyer's market and you are in a position of strength.

hi.......even if you go forward with the deal and agree to pay the additional $12,000......the appraisal will have to be updated prior to closing and could come in even worse than it is now...... the square footage pricing for existing houses is lower than new builds, as you probably know....no matter what the appraisal comes in at the end of final grade and c of o...the lender at their discretion can order an appraisal review....the headache could get much worse than it is now......re-negotiating isn't a bad idea....the realtor obviously doesn't want to rock the boat and prefers to sweep the issues surrounding the file under the rug..i would urge him to accompany you on the trip to re-negotiate...or approach his broker...if nothing else works.do an end run directly to the land owners and the builder..a great defense is a strong offense....best of luck to you....bob mcclure- success mortgage partners- plymouth, michigan......

Coughing up the 12,000.00 may be your only option, if the builder or the landowner will not lower their price. But I would start with the builder. Understanding today's buyer's market is a must, and the builder usually stands to profit more than anyone in a trasaction. He also stands to lose more than anyone should the transaction fall through the cracks. Another question to answer for yourself is this: am I willing to lose this home over $12,000.00 dollars. If you are planning on living is the home for a long period of time, greater than 10 years, maybe you can live with the cash out of pocket. I think that you should push the builder hard to lower the price. I would want him to know that I was very serious about a price reduction since the home has not appraised three seperate times. Good Luck!

There are several issues here. If the new homes are not selling unless the price is dropped, then the market is telling you that the worth of that house is less than the seller wants, by $10k-$12k. The market is correct--it tells you the actual price at which houses sell. I think you have several options. If this is the house that you really want, then negotiate with the seller. The bank bases its loan on the lower of the purchase price or appraisal. If you pay more, that is cash out of your pocket. The builder wants to keep the price as high as possible because of the remaining inventory--if you buy it for less than asking, then future buyers will get the same deal. One possibility is to ask for $12k worth of upgrades--delay the closing if you need to. This assumes that you are willing to pay additional cash plus your down payment. Ask for concessions--buy down the rate, pay for closing costs, etc. If the cash is more than you want to pay and the builder won't negotiate, your option is to continue with the contract or to back out and look for other homes.