Home Buying in Houston>Question Details

Tj, Home Buyer in Houston, TX

If an appraisal comes back few thousand under asking price & we are paying 20% down. If we make up the difference will the loan be approved. TJ

Asked by Tj, Houston, TX Wed Apr 6, 2011

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Simply put. Yes. Have you and your real estate agent reviewed the appraisal? Find out who performed the appraisal. How long they've been appraising homes. What area of town do they live? How many homes have they appraised in that community? Did they enter the home or was it drive by or was it computer generated? Did they include all the upgrades/updates? Based on your findings I would request the lender do a reappraisal... Your agent may also want to put in a call to one of their appraisal contacts to run it by them. Finally, discuss w seller what they think should happen...
0 votes Thank Flag Link Wed Apr 6, 2011
Most likely yes but I would try negotiating with the seller to get the price reduced. Your financing addendum typically states the home needs to appraise for the purchase price so I would guess unless this is an ultra hot property in an ultra hot market that you may be able to negotiate the price down to the appraised value. That is what I would do if I was in your circumstances. If they won't budge and you like the property then go ahead an pay the difference but you may as well try to get the price reduced and I think you have a good chance at succeeding.

Good luck to you.

Don Groff
REALTOR | Mortgage Broker | Consultant
Buy - Sell - Lease - Invest
Keller Williams Realty | 360 Lending Group
o.512.669.5599 m.512.633.4157
1 vote Thank Flag Link Wed Apr 6, 2011
I agree with Christophe! You should ask your Real Estate Agent! If you do not have one, next time you purchase property you should get one! They have the negotiating skills and knowledge of what to do in situations like this! People try to buy and sell real estate themselves and then they end up begging for free advise on websites like Trulia from real estate agents. It does not cost the buyer anything to be represented by a real estate agent, in most cases, so why wouldn't you get one?

Diane Hermis
Total Real Estate Services
1 vote Thank Flag Link Wed Apr 6, 2011

Yes if you make up the difference the bank will approve your loan.
1 vote Thank Flag Link Wed Apr 6, 2011
You don't trust REALTORS, but you will pick their brains and expect useful answers without providing all of the real details of the situation?

If you want to know if the lender will approve the loan, ask the lender.
0 votes Thank Flag Link Fri Apr 8, 2011
Hey everyone,

This is what TJ emailed to me! He got upset that I told him that he needed to be represented by an agent!

"You comments on Truila to the question about an appraisal coming in few thousand under asking price was uncalled for. You totally jumped to a WRONG conclusion. I should post this email on Trulia for all to see, but I will not lower myself to your standards. First of all, I asked this question for my niece ... AND THE HOUSE IS LISTED WITH A realtor and YES a realtor showed the house to my niece. BUT my niece doesn't quite trust the realtor, as most folks don't! So many realtors are just concerned about THEIR bottom line. My niece has not even made an offer on the house .... there have been 3 other homes in the area that have appraised for $3,000.00 - $5,000.00 less than asking price. She asked me if I knew what would happen in this case. I felt that the answer was she could still get the loan as long as she didn't have a problem paying the money and that would be if the seller did not want to lower the price to match. It was the "realtor" that told my niece about the other appraisals AND ONE OF THE HOUSES hasn't even closed. This realtor is telling things she should be keeping to herself.... thus she doesn't trust her!!! So next time think before you jump to conclusions .... seems you have a chip on your shoulder. Don't bother replying as I WILL NOT open your email, I will delete without reading."

I was just trying to let him know the reason that it is important to be represented! Oh well, I bet he/she will hire an agent next time!

0 votes Thank Flag Link Fri Apr 8, 2011
This is the perfect opportunity for your Realtor to go back and renegotiate the deal. Did your Realtor write in the contract that buyer will not pay more than the appraised price. If the answer is yes then you have nothing to loose.
0 votes Thank Flag Link Fri Apr 8, 2011
Best thing to do is go back to your agent and ask him/her to renegotiate the sales price with the seller. Just as Mark stated below, talk to your lender and see what options are available. I don't see why the lender would not be willing to work with you for a few thousand.

Good Luck!
Web Reference: http://www.chrissuh.com
0 votes Thank Flag Link Wed Apr 6, 2011

It likely would be approved, but speak to the lender to see what they say your "options" are. You might also want to go back to the seller and see if they would lower the price to match the appraisal. You can always protest the appraisal and see if the appraiser will review and adjust the report after listening to your (or your agents) reasons the value should be higher.

Sometimes the appraisal can come in below the agreed to sales price and your loan STILL gets approved because you are such a great buyer and there is little risk to the lender (20% down). I always want my buyers to decide if they will go forward if an appraisal is not in-line with the contract, not the lender!

Sounds like your close to a deal. Keep working on it. Let us know if we can be of assistance.

Mark McNitt
Bernstein Realty
m 832-567-4357
0 votes Thank Flag Link Wed Apr 6, 2011
This really is a lender question. However, like many of the others have suggested, you should first try to re-negotiate the price with the seller. I'm curious as to how you arrived at your offer price in the first place.
0 votes Thank Flag Link Wed Apr 6, 2011
You would need to go back to the seller and redo the contract to reflect the value of what the appraisal cam in at. Feel free to contact me with any questions that you may have as I would be more then happy to help you out.
Web Reference: http://www.kgcm.com
0 votes Thank Flag Link Wed Apr 6, 2011
Tj. The best thing to do is to renegotiate with the sellers the difference from the appraisal. 2nd I would ask the mortgage company about putting more money down. Hope this helps
0 votes Thank Flag Link Wed Apr 6, 2011
Check with your lender, but this could be a yes in many cases.

You might also try renegotiating with the seller to reduce the price.

Bruce Lynn
Keller Williams Realty
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Wed Apr 6, 2011
Bruce Lynn, Real Estate Pro in Coppell, TX
yes, but you should ask the seller to reduce the price to appraised value. They will have the same issue selling it to the next buyer that comes along.
They are over priced or the appraisal is not correct.
0 votes Thank Flag Link Wed Apr 6, 2011
Hi If you want to avoid PMI, you can not finance more than 80% of the lesser of the appraised value or the purchase price so yes you can make up the difference to avoid PMI. Being approved is a different question, this change will also effect your overall cost out of pocket. If you are using addtional assets to put down, do you still have what you need for closing costs? You also need to find out if the lender approved you with a certain reserve requirement ( money left over after closing). If you were approved with 2 months of your mortgage payments in reserve and now you have no reserves because you now need to put that money down on the home, it could change the approval to a decline. If this is the case you may get a gift from a relative to increase the reserves, or maybe you have an asset like a 401K , or IRA that you did not disclose initially, that can count towards your reserve requirments. Your current lender should be able to answer this quesion for you relatively quickly.
0 votes Thank Flag Link Wed Apr 6, 2011
This is a non-issue IF you are willing and able to make up the difference. Renegotiating the sales price is not an option that either side would want to explore unless ya'll don't mind waiting another couple weeks to have the loan re-processed. The best thing is to negotiate that difference with the seller & have them contribute the negotiated amount towards your closing costs IF you aren't already receiving a contribution. This way your loan doesn't have to change and you get to recoop some of the price differential. Good luck!
0 votes Thank Flag Link Wed Apr 6, 2011
Dear TJ:

The answer is "probably." It all depends on your lender. If the lender was willing to loan at the sales price and you are making a 20% down payment based upon that price - which is more than 20% of the appraised value - AND paying the difference between the appraisal and the sales price, then the loan-to-value risk for the lender actually is reduced, so it would seem the lender would still approve your loan. HOWEVER, this is something you have to discuss with your lender.
0 votes Thank Flag Link Wed Apr 6, 2011
I agree with Lynn, that this is a question better directed to the loan professional. As for the property not being worth what you are paying, I would suggest that is not necessarily the case.

One appraisal can be as different from the next...they are merely an opinion and bank appraisals are done from the perspective of protecting the assets of the bank, not you or the seller. If your agent did a CMA and you feel the price is consistent with the market and what you are willing to spend that should be your major concern. Discuss your options with your Buyer's agent.
0 votes Thank Flag Link Wed Apr 6, 2011
I would renegotiate the sales price based on the appraisal. They may want a second appraisal.
0 votes Thank Flag Link Wed Apr 6, 2011
Yes, it will, but you may need to write a letter of explanation about why you are willing to pay more. Personally, i'd use that appraisal to renegotiate with the seller and get the price lowered....
0 votes Thank Flag Link Wed Apr 6, 2011
No professional can render an opinion on behalf of another professional. Direct all your questions to your mortgage broker.

Your buyers agent, loan officer should be assisting you

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes Thank Flag Link Wed Apr 6, 2011
Yes, if you pay the difference your loan will be approved. Try to see if the seller will drop the price - show them a copy of the appraisal and clearly that should be enough proof, get your agent to renegotiate the sales price. If the seller doesn't agree to drop the price, (which in this market I don't see why he wouldn't drop it if it's not a lot) and you end up paying the difference, just make sure the difference isn't too much, you don't want to pay more than what the house is worth. Good Luck!
Web Reference: http://www.har.com/zuri
0 votes Thank Flag Link Wed Apr 6, 2011
Yes if you pay the differnce the bank with approve the loan. But I would really think about doing that. I would not do that with my client in this area.
0 votes Thank Flag Link Wed Apr 6, 2011
Although you could make up the shortfall, why would you want to pay a few thousand more than the property is currently worth?
0 votes Thank Flag Link Wed Apr 6, 2011
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