Home Selling in 48076>Question Details

Don C., Home Seller in 48076

what if my home does not appraise for the offers that I am getting for my home?

Asked by Don C., 48076 Tue Feb 21, 2012

I am in a desirable school district in Michigan but the home values have dropped off a cliff in this area. My home is totally updated from top to bottom and I know that there are not real comps to my house in my neighborhood. RIght now I am getting offers for my home that are more than it is going to bank appraise for, I am wondering what the options will be for me to sell my home.

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If the buyer is borrowing from a lender we must use the lower of the sale price or the appraised value for calculating PMI or MIP. Doesn't mean the buyer can't pay more, but typically they will not be able to pay the difference in cash above what they can borrow.
2 votes Thank Flag Link Tue Feb 21, 2012
Hello Don,
If the buyer is planning on financing the purchase then the lender will want to see the home appraise at least at the sales price in order for the lender to approve the mortgage.

Your option would be to lower the price to the appraised price in order to sell. If you cannot do this then perhaps you may wish to consider renting out your home until the market values rise in your area.

Good luck to you!

Laura Feghali
Prudential Connecticut Realty
2 votes Thank Flag Link Tue Feb 21, 2012
Hi Don,

Do you have a current mortgage on your home? If not, and you accept an offer on your home and the home doesn't appraise you have the option of dropping the price to the appraised value, negotiating with the buyer to split the difference or holding out for a 20% down payment buyer or cash buyer. If you're doing a short sale the lender would have to agree to the above conditions.

Good Luck,

Karen Paytas, GRI, CMS
Real Living Kee Realty
1 vote Thank Flag Link Tue Feb 21, 2012
In a case like that either the seller or the buyer would have to bring additional money to closing if you can agree on the difference between the appraisal and the sale price. The other option would be to lower the sale price to meet the appraisal and you would have to bring the difference to closing to satisfy the mortgage payoff.
Web Reference: http://www.joebertera.com
0 votes Thank Flag Link Tue Feb 21, 2012
Everyone is assuming you have an offer with buyers that can not or will not pay the difference on the appraisal. Everyone is also assuming that you are getting multiple offers above the appraised value. I would argue the fact that you're getting offerS that high indicates what fair market value is... and an appraiser is supposed to determine fair market value. I would accept the best offer, and go with it. If the appraisal comes in lower, you'll have to deal with that then. But when the appraiser comes to the house, have offers to show him that you had multiple offers, a list of why your home is superior, and what the estimated value of those improvements are... and make sure it supports the contract price. You might be surprised, pleasantly. If it does come in low, then you and your agent will have to negotiate with the buyer on how to handle it - they buyer may be willing and able to pay the difference or you might agree to split the difference. Part of the equation of negotiation is knowing what the parties CAN do, and then convincing them to do it. So, look for the best offer from someone that is well qualified and putting down more than the minimum required for their loan - those are your best candidates for paying above appraisal price.

.....of course, I am sure you have a great listing agent who already explained this to you, so I am curious why you are asking the question here. I am also curious why you are collecting offerS and not ratifying any contracts?
0 votes Thank Flag Link Tue Feb 21, 2012
I am confused. The question starts by saying what if the house does not appraise for the offered amount and later you say you are getting offers above what you think it will appraise for. Offers above appraised price is GOOD, below will be bad. If it appraised for more than the offered amounts that is fine and the bank will be happy. If the appraisal comes in below the offers then the bank will likely not approve the loan to the buyer. Your options at that time would be to lower the price to the appraised amount or you could bring money to the closing table adding enough to pay off the loan you have on it. Renting the house and buying another might also be an option to look at.
0 votes Thank Flag Link Tue Feb 21, 2012
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