Home Selling in New Jersey>Question Details

Out Of Luck, Home Buyer in Akron, OH

What right's do the buyer have if the appraisal comes in lower than the agreed purchase price. Can the?

Asked by Out Of Luck, Akron, OH Sun May 3, 2009

seller just say they are not selling the home?. Can they then sell it to someone else?

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The standard contract states that the buyer, failing to obtain a mortgage, is out of the contract and will get the deposit back. If the buyer makes up the deference between the sale price and the mortgage amount, the contract will stand, the mortgage having been obtained as per contract. If the buyer walks, as they are entitled to, then the seller can decide to continue to market the property and they can surely do so. However, they are on notice that the property is not worth what they wish to get. Another buyer, using a different mortgage company and appraiser, may come up with better results but that's a very long shot and the seller may be well advised to drop the price. I'm not sure how much of the first appraisal will reach any subsequent mortgage company.

You may even argue the appraisal a bit. I know that, before the meltdown, such maneuvers were successful in some cases. How they would work these days is not something with which I can say I’ve had experience.
0 votes Thank Flag Link Mon May 4, 2009
The buyer has the right to walk away, or pay the difference if the home does not appraise. If the buyer walks away then the seller can try to sell to someone else. However with every new buyer an appraisal will still be done unless they are paying cash, and most buyers will not want to purchase the home if it appraises much less. It would be in the best interest of the seller, if he wants to sell the home to work with the buyer.
0 votes Thank Flag Link Mon May 4, 2009
Yes, the seller can sell to someone else if you are not willing to pony up the cash to cover the difference. However, in a buyer's market, the seller might be willing to come down in price because the next buyer's lender -- if there is a next buyer -- might come up with the same result.

Lenders will go off the contract price or the appraised value, whichever is lower. Starting May 1, with all FNMA FHMC loans, lenders cannot ask appraisers to change their reports nomatter how inaccurate they may seem. This is not yet the case with FHA. So, choose your lender carefully., and use someone with local expertise.
Ruth Bonapace
mortgage specialist
ruthbonapace@gmail.com
0 votes Thank Flag Link Mon May 4, 2009
Hi there, by the time the appraisal comes in, you are far enough along in the transaction that the seller generally wants to hold on to the deal and will likely be inclined to make an accomodation. Appraisals can be challenged as well. We've had a number of deals recently that have underappraised and a few have been challenged with a good outcome - comps can be hard to find and sometimes the appraisal just misses the mark.

The bank wants to be sure they are covered value wise for what they have lent. In a declining market, it can be touchy in low money down deals, such as FHA - think about it, you only have a 3.5% cushion - and if there are seller concessions for closing costs in the deal, then the price is inflated to cover those. That can put real pressure on the appraisal because in fact your mortgage is based on the price that includes the money to cover the seller concession, but the real value, ie what you are willing to pay the seller, is net of it.

In answer to your question, can the seller sell to someone else, "yes".

You now see why cash deals can be so appealing to sellers, or those with high down payments - it either elminates or mitigates the appaisal concern.

Good luck to you!
Jeannie Feenick
Search and connect at http://www.feenick.com
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Mon May 4, 2009
Out of Luck,

In this market, that's a really good question. I would bet that some sort of deal is generally reached in these situations. The agents would be much better to answer that question.
0 votes Thank Flag Link Sun May 3, 2009
Do sellers usually walk away if the appraisal is lower than purchase price?
0 votes Thank Flag Link Sun May 3, 2009
You betcha. It's their home and they can keep it on the market for whatever they want in price, and as long as they want. This providing they're not under some financial duress.The appraisal contingency is for the buyer and lender's protection. However, if you don't have enough DP for the the loan to go through given the appraisal, you simply can't hold the seller hostage.
0 votes Thank Flag Link Sun May 3, 2009
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