Home Buying in 48124>Question Details

Kelly G, Both Buyer and Seller in Dearborn, MI

We made an offer on a home for $210K, listing price $225. Appraisal came in at $185K b/c of comps. What next?

Asked by Kelly G, Dearborn, MI Wed May 14, 2008

Comps in the area are all over the board as Dearborn is made up of varying neighborhoods and income levels. In the area which the new home is listed, homes have sold anywhere from 175K to 500K, depending on whether it is a forclosure, short sale or square footage. Compared to similar homes in Dearborn Hills, where this house is located, the offer we made is average and very generous. What recourse do we have now that the appraisal has come in lower??

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Depends on several factors: 1) What is your financial situation? Your lender will more than likely not finance more than the appriased value. In that case you would need to make up the balance. 2) How was your purchase agreement written? Did it include a clause stating that the home needed to appraise at minimum for the purchase price? If it did, you can walk away from the deal if you do not want to bring more money to closing. 3) How badly do you want this house? Are you willing to pay more than it is 'worth'? Try using the appraisal to renegotiate with the sellers and get some more concessions from them (lower sales price). Are you represented by an agent? He/she should be helping you out with this....
2 votes Thank Flag Link Wed May 14, 2008
Same situation happened to me very recently.

1. If you have appraisal contingency, you should use it to cancel the contract and get the deposit back.

2. Then, submit a fresh offer to reflect a price close to the apprased value.

3. It is silly to pay 11% higher; you will "lose" that 11% equity the instant you close escrow. You would have paid $210K for a property that is worth $185K. ("keep the change" is okay for coffee..)
1 vote Thank Flag Link Wed May 14, 2008
Bring 25k to closing with you. You are generous.
1 vote Thank Flag Link Wed May 14, 2008
Obviously, you won't get the loan so you basically have two options.. #1) Pay the difference.. you would really have to absolutely be in love with the house to do this or #2) ask the seller to come down to the appraised at price. If they don't and you back out..keep an eye on that property because I'm preety sure they will be convinced to lower the price.
0 votes Thank Flag Link Mon Aug 4, 2014
As a buyer it's in your best interest to purchase the home for $185,000 but it depends on how the transaction was handled between you and your agent, and how bad you want the house - if you are willing to pay above appraised value and by how much.
0 votes Thank Flag Link Mon Feb 3, 2014
Renegotiate a lower price unless you feel that the Appraisal is inaccurate then you should have the appraisal disputed. Your agent can help you pull comparables and verify that the comparables used in the appraisal are as accurate as can be for the property in question.
0 votes Thank Flag Link Mon Dec 9, 2013
Alot depends on what the seller owes on the property but you certainly don't want to pay more for a property than it appraises for in this declineing market. My opinion is to cancel the contract any way you can. If the seller cannot move their price down because they have little to no equity it may be a candidate for a short sale which is my field of expertise. you may contact me @616-299-0757
0 votes Thank Flag Link Wed May 14, 2008
Appraisal came in at $185K b/c of comps. What next? As a buyer (we made an offer) your agent should be using the appraisal to further decrease the price of the home. You do have a Buyer's Agent, right?

What recourse do we have now that the appraisal has come in lower?? Your offer should spell out your choices. Some home buyers decide this is the home for them and purchase even though the home is worth less from the start. Those buyers will have to bring additional funds to the closing because the lender will not.

I suggest speaking with your agent and lender to clarify your choices.
Web Reference: http://mi-living.com
0 votes Thank Flag Link Wed May 14, 2008
Take the appraisal to the seller & renegotiate to get a lower price, you are in a great position to do that.
Aren't you glad to know up front that you may have paid too much?
0 votes Thank Flag Link Wed May 14, 2008
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