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Angelanini, Home Buyer in Leesburg, VA

In a short sale, what happens if the price of a home is much lower at the appraisal then what the agreed amount was?

Asked by Angelanini, Leesburg, VA Sun Dec 9, 2012

Not alot of townhomes for sale for comparables.

I'm afraid we should have negotiated more on the price...Is there a way to renegotiate on the price if lower?

I ask this because ALOT of the homes have been lowering in price since Sept.

Help the community by answering this question:


In most cases short sales won't get approved. Bank usually orders BPO (Broker Price Opinions) which give them a fair market values.
0 votes Thank Flag Link Wed Feb 27, 2013
Hi Angelanini,

I'm going to bet this does not happen. If it does happen, like Sonal said below, the appraisal contingency protects you, and typically you're not obligated to pay higher than the appraisal. So if the seller (and the bank, in the case of a short sale) does not to sell at the lower appraisal amount, you have the option of either proceeding or walking away from the contract.

But, typically short sale listings are priced well below market value to begin with, making an appraisal almost a mute point. If you paid *above* value on a short sale, I would suggest perhaps a serious discussion with your buyer's agent. Typically short sales are closing for 5% or more below market value. And that's a very broad rule of thumb, but they are almost always below market value.

Good luck; feel free to call or email if I can help further.

Matt Elliott
0 votes Thank Flag Link Sun Dec 9, 2012
Hi Angelanini,

Do you have an appraisal contingency in your contract? The purpose of the appraisal contingency is to give you a few options when the appraisal comes in lower than contract price. You can send the appraisal to the listing agent and see if the bank will re-approve the short sale for a lower price. You can make up the difference with more cash to close. Or you can come out of the contract. You have these options if you have an appraisal contingency.

Secondly - it is normal to see seasonal fluctuations in prices in this area. I don't know if you have been seeing list prices go lower as the days on market increases, or if the sold prices are lower. Also, don't know if it's for similar housing to what you have under contract - all of these factors make a difference when gauging value.

0 votes Thank Flag Link Sun Dec 9, 2012
I am assuming you are financing the purchase and the appraisal was done by your bank. Your sales contract states the amount at which the property must appraise. You can get out of the contract if the appraisal is less than this amount required by your lender for your loan.

Bank appraisals are generally conservative and may come in lower than actual market value in Loudoun. On average prices are rising in Loudoun. Appraisals look at recently sold and for sale properties to estimate current value. Appraisers try to adjust for market conditions, but since they don't have a working crystal ball appraisals are not perfect. The biggest decision the appraiser makes is the selection of comparables and with some properties it is difficult to find perfect comparables. Inventories in Loudoun are down so you are correct that there may not be many good "for sale" comparables.

I don't know the details of your transaction but you may still be paying a fair price. The appraisal is an estimate and could be low. Before you got the appraisal you were satsified with the purchase price. The true "market value" of any home is really the amount someone is willing and able to pay.
0 votes Thank Flag Link Sun Dec 9, 2012
You should be working with a buyer broker and asking them and not the Internet.

You have two options, if you're contract is predicated on your getting a mortgage then you may terminate the contract, you will be out your expenses to date. You can send a copy of the appraisal to the sellers lender who is ultimately the one in charge of the short sale and tell them they may either accept the appraised value and re-do your contract in which case you are prepared to close on schedule otherwise you'll terminate.

Good luck.
0 votes Thank Flag Link Sun Dec 9, 2012
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