Home Selling in 97603>Question Details

Kim Beegle, Home Buyer in 97603

Does a low appraisal on a house deal really need to be the end of it? what else can we do?

Asked by Kim Beegle, 97603 Sun May 13, 2012

We made a full price offer on a house, and the appraisal came back $40,000.00 under the asking price. Does this mean the offer no longer good? Does this really have to mean the deal is off? What else can we do?

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Answers

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Assuming you aren't paying cash, the appraisal is one of those things that has to come back to make a deal go through. One of the little secrets of real estate is that appraisers will usually come up with the necessary numbers to make a deal go through if they can be remotely justified. The fact that yours has come in 40,000 below your full price offer is pretty clear evidence that you're (significantly) overpaying for the property.

Your best option is to tell your buyer's agent that you'll buy the home for the 40k lower number, or find another property to make an offer on. You can list a home for anything you wish, but with an appraisal 40k below what the seller is asking, the seller has to realize that he or she will never sell it for that higher amount. Remember, the situation in the residential real estate market has changed dramatically from the boom years between 2000-2005 and this is a buyer's market. If you walk away it could be months or years before another buyer comes along.

While you're at it, you may look for another agent - one who will bring a fair offer on your behalf instead of someone who is only interested in maximizing their commission.
0 votes Thank Flag Link Mon May 14, 2012
You need to check with the bank to see what can be done. Either the seller lowers the price and tries to make it work or you find a way to come up with the difference. Good luck with the negotiations.
0 votes Thank Flag Link Sun May 13, 2012
It will depend on the typoe of loan. The first thing to do is that your agent and the listing agent should compare comps and ask for a copy of that appraisal to see if there is indeed a problem with the value. If the bank refuses to change it, then your choice is asking the seller to reduce the price or you paying cash to make up for the short fall.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Sun May 13, 2012
Hi Kim,

It all depends on the type of financing you're using (i.e. cash, conventional loan, FHA loan, VA loan, etc.). If you are not paying all cash, you are allowed to pay the difference between appraised value and purchase price in cash unless you are using VA financing. (VA financing requires that the property appraise 100% of purchase price). Now, if you don't want to (or are unable to) pay the difference in cash, your Realtor can do an Addendum to the puchase contract to see if the seller will lower the price to appraised value - or you and the seller could meet somewhere in the middle. If none of these scenarios work, then you will need to cancel contract if you can't finance the property.

Good luck.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Sun May 13, 2012
I will agree with this posting, and even the other. Have someone that knows appraisals look at the appraisal, someone that is local, then if it's good, you need to either get the seller to lower their price or walk away. Don't let emotions take over your mind set. There is always another home.

Best to you all.

HLR
Flag Sun May 13, 2012
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