- Seller accepts appraised value (they are not required to do so)
- Buyer pays the difference between contract price and appraised value
- Buyer and seller agree to split the difference (not always an equal amount)
- Dispute the appraisal and provide other sales that support contract price
- Buyer walks away
As you may realize, this is but one issue that adds to the CASH is KING purchase offer.
Then, if you pile onto the financed offer the VA or FHA nonsense, the buyer's prospect of success deminishes more.
The home sellers I work with are well prepared for this situation. You would NEED to increase your downpayment to close the deal.
Best of Success,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, Fl
You can only back out of the deal if the appraisal contingency was part of the contract, otherwise you are obligated to perform as agreed.
A financing contingency may not be an out, because the home could appraise for less and you are still approved for the loan.
Low appraisals are going to be a part of the market going forward because they are a part of an improving market.
When values are increasing, past sales are closing at lower prices than current market value; Hence: appraisals will come in low most of the time because they are based on lower-value closings.
Appraisers will eventually use an appreciation factor to compensate for the increase in value, but they are going to be hesitant to do so until we have a significant history of price appreciation.
Appraisers have taken a lot of blame for the runup in values during the boom, and the threats of being sued are still ringing in their ears. They are not going to take on any unneccessary risk.
Jim Sweat, ABR, CRS, CDPE, GRI, e-PRO, ILHM
Author of REAL ESTATE CSI: CONTROVERSY, SECRETS & INSIGHT (availalable early 2013) American Realty
A Proven Professional Working for You!
18 Years Experience
Tammy Hayes, Realtor
RE/MAX Palm Realty