If I win a bid on a foreclosure, and the appraisal is much lower can I lower my offer to that appraisal?

Asked by tommywaters, Ann Arbor, MI Fri Feb 15, 2013

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Yanoska Diaz, Agent, Miami, FL
Fri Feb 15, 2013
As an REO agent I can tell you that it all depends on the circumstances and the Seller/Lender in question.

1. If the appraisal came in at a reasonable lower amount not exceeding 10% of your offer, the Asset Manager will consider re-negotiation.

2. The Asset Manager will take into consideration your market's condition and inventory as well as the number of days the property has been in the market. If conditions are reported appreciating and the asset is reported as "no resale issues", chances are, they will place the property back in the market.

3. If your offer was the highest among a multiple offer situation and offers were made on the property better than the value conclude by the property appraiser, chances are Asset Manager will ask the Listing Agent to contact those potential purchasers and find out if they remain interested on the property.
2 votes
Greg Myers, Agent, Gaitherburg, MD
Fri Feb 15, 2013
If the home appraises lower than your contract price and your financing is an FHA, VA program the mortgage coming will NOt loan any more money on the than the home is worth. Once the REO bank is delivered notice your home failed to appraise they can accept the appraisal value and lower the price of the home or ASK you to pay the difference in CASH at settlement. Some times these appraisal issues can become "Stand-offs" between buyer and seller especially is the seller is an REO bank.

If your morgage loan is conventional and you used a financing contingency and a appraisal contingency the loan process stops until buyer and seller work out the appraisal value $$ shortage.

Greg Myers
RE/MAX Realty Group
1 vote
Thank you
Flag Fri Feb 15, 2013
Shanna Rogers, Agent, Murrieta, CA
Fri Feb 15, 2013
Hi tommywaters,

You should talk to your Realtor about this. Does your contract have an appraisal and loan contingency in it? (I'm assuming you're not paying all cash). If you do have an appraisal and loan contingency and you have NOT removed them, you can attempt to re-negotiate with the bank/seller. Have your Realtor do an addendum to lower the price and have them submit the complete appraisal with the addendum. If the bank/seller does not agree to lower the price, and you do not want to (or can't) pay the difference in cash, and your appraisal and loan contingency are still in effect, you can cancel contract.

Shanna Rogers
SR Realty
1 vote
Ella Blaine, Agent, Mechanicsville, MD
Fri Feb 15, 2013
Definetely speak with your agent. The appraisal protects you from not overpaying. Your lender will not lend you more than the appraised value anyway. So, unless you are willing to pay the difference, you can't get funding. So, YES, RE-NEGOTIATE . The bank may consider the price reduction when you provide them with the appraisal. Good Luck!
1 vote
Robert McArt…, Agent, Fallston, MD
Fri Feb 15, 2013
I would speak with your agent concerning this. It would be a problem if you are obtaining financing.
If the offer was based on comparables, condition, etc. - I would be interested in why the appraisal came in so low.
1 vote
Akil Walker, Agent, Upper Marlboro, MD
Mon Feb 25, 2013
Yes, typically your lender will not provide a loan for more then the house appraised for.

Good luck
0 votes
Jessica Hood…, Agent, Gambrills, MD
Mon Feb 25, 2013
Generally, yes. The bank (theoretically) cannot sell the home for more than market/appraised value so in most cases they will lower the price to match the appraisal. Your agent should be advocating for that through the banks representative.
0 votes
Miekeba Jones, Agent, Silver Spring, MD
Fri Feb 22, 2013
Hi Tommywaters, write a contingency for the appraisal amount submitted with the offer. May I help you with your home purchase? contact me miekeba@heymannrealty.com
0 votes
Catherine Pu…, , Silver Spring, MD
Mon Feb 18, 2013
Hello Tommy,

If you have not already been approved by a lender, I would be happy to run numbers for you to let you know how much you can qualify for.

Feel free to call, write or text if you have any questions!

The first step in the home buying process is to get pre-approved for your mortgage. You can start this by going to my online link. Click here and enter your information so I can run numbers for you: https://6760686183.secure-loancenter.com/WebApp/Start.aspx?&… .
After you hit SUBMIT, I will be able to access your information through our secure website and will run figures for you right away.

This does not obligate you to use Fairway Independent Mortgage Corporation, although we do appreciate the opportunity to work with you.

I am looking forward to working with you and helping you get the keys to your new home!


Catherine Purcell
Senior Mortgage Loan Officer
Fairway Independent Mortgage Corporation
Cell 202 573-6035

Over 25 years of Real Estate and Mortgage experience
focused on educating my clients so you can make an informed decision that best suits your needs!

MLO# 194172 FIMC NMLS# 2289
0 votes
Geoffrey Gra…, Agent, Los Angeles, CA
Sat Feb 16, 2013
Quite simply, YES. Your contract should include a finance addendum that addresses the type financing you are obtaining for the home FHA/VA/CONV. Now if the Appraisal is FHA or VA the Appraisal is assigned a number that is married, if you will, to that property and anyone that attempts to purchase that property utilizing FHA or VA financing is made aware of the Results of the Low Appraisal. Hence anyone trying to purchase the property using a Government backed loan can only receive funding up to that Appraisal amount. The Asset Manager knows this. If they play hard ball, WALK AWAY. Don't buy that line that their losing money on the property....IT'S SIMPLY A LIE. If you want to know more...contact me.
0 votes
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