Cindy, Home Buyer in Covina, CA

Need advice for appaisal report value is different from purchase value.

Asked by Cindy, Covina, CA Sat Dec 12, 2009

My house has pending sale, but the appraisal report is lower ten thousand than my purchase value. The lender ask me to pay extract eight thousand to pay more down payment. For me, even I have the sum of money, but I don't feel comfortable to pay for that. Is this happen frequently in buying a house. How to I deal with this situation?

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Jed Lane, Agent, Petaluma, CA
Sun Dec 13, 2009
You and your agent should be having this convrsation. If the appraisal is lower than the agreed purchase price the bank typically will fund lower. The buyer can make up the difference, as you say you've been asked to do or the seller can lower the selling price which is what you should be asking for them to do. You can compromise and pay some and the seller can take some less.
Depending on the contract and where you are with contingencies you might not be in a bargining position but we all hope you are.
Your agent and your mortgage broker really should have prepared you for this possibility. We are all operating under new federal rules governing appraisal and lending. Look up the HVCC Rules to become familiar.
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Al Akerman, Mortgage Broker Or Lender, Lakewood, NJ
Sun Dec 13, 2009
It is very typical in this declining market for the appraisal to come in for less than the purchase price.

Please check with your attorney about the following:

If you are obtaining a conventional loan then you should have a "mortgage contingency" in your contract which would entitle you to walk away from your deal and get back your deposit.

If you are getting an FHA loan, you would be further protected by an "ammendatory clause" which states specifically states that if the house appraises for less than the purchase price then unless the seller agrees to lower the purchase price you have the right to back out of the deal and get your money back.

Good luck.
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Emily Knell, Agent, Huntington Beach, CA
Sat Dec 12, 2009
Yes, this can happen.

If you are the buyer and this is a short sale, re-submit your offer for what your appraisal came in for & make sure the listing agent turns over your appraisal report to the bank so they can see it, they should come down in price to sell for Fair Market Value.

If this is an REO property, the bank may tell you to pay the difference because there are other buyers who will step up & do that.
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