Home Buying in 30306>Question Details

Jennifer, Home Buyer in Atlanta, GA

Are there any options if the appraisal comes back less than agreed upon price?

Asked by Jennifer, Atlanta, GA Fri Aug 22, 2008

We made an offer on a house and are currently in our due diligence period. The bank did an appraisal and it came back $19k less than what we already agreed to pay. We really love the house but can't afford to pay the difference. We're thinking of getting another appraisal to see if it comes back higher but if not are there any other options besides backing out???

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I am assuming you have not signed off on the Appraisal Contingency? You need the have the appraiser justify his value to the bank, or find some new comps. Another appraisal is pointless, the bank has access to the same data the appraisers have. If the bank sees sales comparison they feel are more realistic, they will stick to their decision. In todays market, I doubt anyone would over pay for a house. Send an addendum to the original contract offering the appraised value price. Your Realtor should help with this.
3 votes Thank Flag Link Fri Aug 22, 2008
You could always go back to the sellers and tell them that you really love the home but, because the appraisal does not come out to the price that you offered, you would like to try to renegotiate the price with them. You will not get a mortgage for more than the appraised value so, unless you can come up with the difference in cash (which probably wouldn't be a good move in this declining market), you will have to walk away. In MA we have a mortgage contingency in the offer, which I am assuming you do also. This protects you from having to purchase the home if the bank doesn't give you a loan. Getting a new appraiser won't work because they will all be looking at the same comps. Also, even if you did get another appraiser to appraise higher, you would most likely be overpaying for your new home. My advice is to go back to the sellers and see what they can do. Hope this helps & good luck!
2 votes Thank Flag Link Fri Aug 22, 2008
In GA, there are 5 options for this situation, but I'll make it really simple. As the other agents have said:
1) your agent/REALTOR can help you in this process and should be guiding you
IF you don't have representation, GET IT, you need it (I have one slot available and might be able to help you)
2) what you really need to do is renegotiate the selling price
Your agent should have done a CMA before you made your offer, in order to align it closely with the market value. Either way, though, you'll have a tough time getting the bank to let you pay more than a property's appraised value and why should you fight to pay more?
0 votes Thank Flag Link Tue May 5, 2009
Bearing in mind that your realtor has advised you properly, if he/she can supply your loan originator with comps proving value, the loan originator can dispute the appraisal.
0 votes Thank Flag Link Sat Aug 23, 2008
Your agent has hopefully done the following:

1. negotiated a Due Diligence Period with a timely right to address concerns by amendment

2. negotiated an Appraisal Contingency Period with a timely right to seek a Price Reduction, and a right to terminate if the negotiation is unfavorable

If not, I hope that your Earnest Money is not in jeopardy.

If not, another appraisal is not an easy proposition.

If not, depending on the structure of your loan and your lender's underwriting guidelines, you can always pay more from your own funds to allay the difference.

If you can't afford the alternative, I hope that your agen t did their basic job.

Unfortunately, hope is not a strategy.
Web Reference: http://intowninsider.com/
0 votes Thank Flag Link Sat Aug 23, 2008
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