You can negotiate the 5% difference to make this close.
Did the seller counter with you comming up with the difference if it didn't appraise at the amount you offered ?
If not, have your agent talk to the listing agent and have the seller rewrite the contract.
It depends on what kind of loan you have and what your ratio is. If the lender is going to to give you loan based on 80% loan to value, then you should be fine because you have enough down payment to make up the difference.
I would suggest you have your agent try and renegotiate the purchase price for you. All the seller can say is no. Maybe they will split the difference for you.
Remember, an appraisal is one persons opinion of what the home is worth. The other side of that is do you want a home that didn't appraise for the agreed purchase price?
Agents who are active in the market place realize there are a lot of appraisal problems going on right now and it might just be the appraiser. If push comes to shove, ask for another appraisal.
Greg, the earlier answer is correct in that the bank will appraise to the sales price OR the appraised amount whichever is LESS! In your case you have a down payment of 35%. Depending on whether you intend to buy the home owner occupied or investor status will determine how the bank views your down payment requirements. If buying owner occupied it is likely the bank will accept your down payment no problem. If investor, ususally 30% is required so you should be alright there as well. The real question is; are you willing to pay 5% more for the house than it's worth? You should try and negotiate the purchase price down by 5% in order to protect your own interest.
In general a lender will only loan to the appraisal amount. If the seller will not lower the selling price to the appraisal amount, and you still want the house, then you will have to come up with the additional money to meet the sales price that the seller wants. If you do not want the house, you need to check that there is a contingency that you are not in breach if the house does not appraise and you should get your earnest money back. I hope this helps......Hal