Home Buying in Fremont>Question Details

Arkangel, Home Buyer in Fremont, CA

Do sellers have to agree if an appraisal comes in low on a SS?

Asked by Arkangel, Fremont, CA Thu May 17, 2012

If an appraisal comes in low on a short sale, do the sellers have to agree to lowering the price or is the decision solely up to the lien holder(s)?

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The lien holder controls the transaction. If the lien holder does not agree, it will not matter whether the seller agrees or does not. The lien will not be released.

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 buyer’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.
0 votes Thank Flag Link Fri May 18, 2012
Barbara is correct stating the sellers really shouldn't care.
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.

0 votes Thank Flag Link Fri May 18, 2012
Hi A, sorry I did not get back to you sooner I was busy. You got a lot of good answers. I also respomded to your email.....Dawn
0 votes Thank Flag Link Thu May 17, 2012
Barbara is correct, the seller only signs the offer (accepting the offer) but really does not care since he/she is not going to get anything from the sale. The lender is the one who has to agree to the price.


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.

Good Luck
0 votes Thank Flag Link Thu May 17, 2012

Thank you for your response, would It be possible to communicate with you via email? I would like to include some specifics and get some insight from you.

0 votes Thank Flag Link Thu May 17, 2012
In my experience, the sellers have no real say. In a short sale, they can get NO money from the sale, it is up to the lien holder to decide how low they are willing to go, which is usually the amount that it appraises for. I believe the contract says that the seller agrees to sell the property to that buyer if the lien holder agrees to allow a short sale, and that if the lien holder (bank) does agree to a short sale, the lien holder will determine under what price and terms they are willing to grant the short sale. Once the seller signs the contract, the seller has no interest nor say in the contract, in my understanding, and I do a lot of short sales.

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.
0 votes Thank Flag Link Thu May 17, 2012

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.

Shanna Rogers
SR Realty
0 votes Thank Flag Link Thu May 17, 2012
Both the lien holders and the seller would hve to agree
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.
Good luck
0 votes Thank Flag Link Thu May 17, 2012
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