If the buyer is getting a loan, the lender who has done the appraisal will base the loan amount on the appraised value. The buyer will have to obtain an addendum reflecting the new price signed by the seller to be provided to the buyerâ€™s lender as the basis for the new loan. The new agreement must also have the approval of the lien holder.
If the buyer is willing to pay the additional amount needed to make up for the low appraisal, I believe the buyer can do that with no additional concessions on the part of lien holder or seller. The buyer can release the financing and appraisal contingency and move forward to close knowing the amount needed to close will be larger and will fall totally on the buyer.
We just had a transaction that the appraisal came in low, and the short sale lender was quick to agree to accept the appraised value and continue with closing. As others mentioned it depends on the lender, but I think most lenders will understand that trying to sell a property above appraised value might not work out.
My advice to you would be to be patient and hang in there if you really like the property. Counter offer the lender for now and give the lender some time to look into the situation. Lenders will normally
have another appraisal done every 3 months if needed.
If you are asking if the buyer has any recourse (the buyer's lender does an appraisal, say at $500,000 but the contract price in a short sale is $550,000), the buyer can appeal to the seller's bank, but if the seller's bank (the lien holder) holds firm on their $550,000, the only recourse the buyer has is to come up with the difference in cash, or back out.
Both the seller(s) and the lien holder(s) have to agree. First, the seller(s) has to agree/sign the Addendum your Realtor prepares. Once all parties have signed the Addendum (sellers and buyers), the sellers Realtor will submit to the lien holder(s) for approval. If the seller(s) and/or lien holder(s) don't agree to lower the price, you may have to pay the difference in cash (if you have the cash) - or some of the difference if you can meet somewhere in between appraised value and purchase price. The only type of financing that will NOT allow you to pay any difference between appraised value and purchase price is the VA loan - all other types of financing will allow you to pay any difference.
One thing to always remember the seller is always in charge as the lenders agreeing to accept less is merely a condition of sale and they don't get to decide what the seller decides to do.