Home Buying in 94531>Question Details

Happyendings, Home Buyer in 94531

What if the appraisal is lower than the purchase price of the home we are buying?

Asked by Happyendings, 94531 Wed Mar 31, 2010

This short-sale property in Antioch, CA was orginally listed at $187,900. We offered $217K and it was accepted by the sellers. Their bank recently counter-offered at a purchase price of $225K, which is higher than what we wanted to pay, but our realtor and broker recommended we agree to it in order to help expedite the process. The bank has now approved the short sale at $225K.

If our appraisal comes out lower than $225K but not below the original listing price, will the price have to drop? Will we have to make up any difference(s)? I know our lender will not pay more than what it is appraised for.

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Answers

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If the house appraises for less than the purchase price, then one of three things occur:

- the sales/purchase price will have to be renegotiated to no more than the appraised value so you can continue with the purchase (the most likely scenario); or
- you will have to make up the difference between the appraised value and purchase price as the mortgage will be based on the lessor of the two (the most unlikely scenario); or
- you can cancel the agreement, have your earnest money deposit returned to you, and walk away so you can look to buy something else.
2 votes Thank Flag Link Wed Mar 31, 2010
who will have to make up the difference between the appraised value and the purchase price, buyer, I assume.
Flag Tue Sep 17, 2013
If you have an FHA loan then you would have had an FHA appraisal that will follow this property for 6 months. It would be in the bank's best interest to lower the price to the appraised value. I have had B of A agree to lower the price after the FHA appraisal came in $25,000. lower than the offer price.
0 votes Thank Flag Link Thu Apr 8, 2010
I note Lew is in MA, just want to verify that it is the same thing in CA.

1. Even if you agreed to the 225K, if the appraisal is lower, you can request a reduction in price based on the appraisal report.
2. If the bank refuses to negotiate a new price, you can walk away.
3. If you really like the house, you can pay the difference.

Hope you do have a happyending!

Alex Barraza
1866 Clayton Rd Ste 209
Concord, CA 94520
alexbarraza@smart-realestateservicesc.om
925 408 1479
0 votes Thank Flag Link Mon Apr 5, 2010
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