The appraisal came in to low what do I do?! Help can I still get the property? What would you do?

Asked by Luis, Hollywood, FL Tue Dec 15, 2009

I just received an appraisal for $50K and I am in contract with the seller (Fannie Mae) at $71K. On an investment property (Duplex). Now I haven't talked to my lender yet but if the lender was still willing to give me a loan for $71K technically can the seller still keep my escrow money? I think that the contract only says that if I can’t obtain financing then I can get out with my escrow. But technically the bank didn’t reject my loan. What are possible outcomes to my scenario? What if I wanted to offer the seller $55K for the property? Would it be in the sellers’ best interest to take it? What if the seller says no and decides to put it back on the market what do you think I should offer the seller for the property? The HomePath program is a scam full of beurocracy and red tape. Am I the victim here? They had an asking price on the property for $74,000 don’t they do any kind of market analysis before they set a price?

Help the community by answering this question:

+ web reference
Web reference:


Magda Robles, Agent, Weston, FL
Tue Dec 15, 2009
Hello Luis. I dont know if you have a realtor or not. If you are dealing with Home Path Program, for sure you do have a representative to handle the financing issues. No lender specially in todays market is going to give you a loan on a property that does not appraise. You or your representative need to contact Fannie Mae Rep. and notify them by sending them the appraisal. Then Seler, in this case -Fannie Mae will order a new appraisal. There could be many factors why this appraisal came low. My advice, do not make any "judgements" on whose fault this is. Instead, look for responses, solutions and options. Now you know next time you need to buy or sell a home you need a "Realtor" to represent you. Look under City of Hollywood - Housing - Legal advice.

Wishing you the best. Magda
0 votes
Florida Home…, , Florida
Tue Dec 29, 2009

You are not a victim of anything more than being a customer in the real estate market in Florida. The inventory of foreclosures and short sales has cause the market to be completely unpredictable. This issue has nothing to do with the HomePath program, it has to do with the Florida market.

Your contract should allow you to get your deposit money back because you will be denied financing based on that appraised value. If you decide that you still want the property at that price (which I don't recommend) then I would suggest a HomePath loan. The HomePath loan does not require an appraisal. You could actual get a loan at 85% of $71K through the HomePath program. Again, I don't recommend it knowing the appraised value. However, I have known many investors who will still purchase a property knowing that value is low simply because of the cashflow opportunities.

Do a little research about the HomePath mortgage program. It is a great program for investors. As with any real estate transaction, you should always do your own due diligence to make sure you know what you are buying.
1 vote
Bruce Bills, , Dallas, TX
Tue Dec 15, 2009
I just had the same thing happen to me, but I was the seller instead of the buyer. We got a legitimate offer on the house and then the appraisal came in $75,000 lower than the agreed upon price. My realtor felt the appraisal was very badly done, as did I, so we sent a rebuttal to the appraiser and the bank in an attempt to get a reconsideration of value. The effort was unsuccessful and we had to cancel the transaction and the buyer received their deposit back in full. We had already dropped the price by almost $100,000 (original asking price was $399,999) and the appraisal still came in that low. If the buyer won't make up the difference in cash or the seller won't reduce the price, or a combination of the two, the deal just has to be cancelled and the buyer released from their commitment.
Web Reference:
1 vote
John Bennett, Agent, Orlando, FL
Tue Dec 15, 2009
Yes they do a BPO, many times , several. They can be wrong as can the appraisal. What you have is a huge miss on price, something is wrong!

Now Luis, it looks like you are doing this without a Realtor. Not a good Idea.

its a horrible idea!!!!!

Not granted there are good Realtors and less good ones, but a good one can really help.

What to do! Well You need a Realtor, they will cost you nothing (or should) and they can keep you out of trouble. You need to submit appraisal to bank (Bank should have ordered in first place) and get the rejection
so you can walk (are you in the time allowed?)

Luis, Realtors do what you are trying to do EVERY DAY! They know the ropes, get one NOW!

Luis, if you where climbing a Mountain, you know ropes and stuff, would you want to do this alone or might you want to buddy up with a climber with a lot of climbing experience. Sure you might fall, but the chance is
a lot less, and if you fall, you might have have a rope attached to save your fanny.

YOU should never be trying to buy a $50,000 home for 71K - no no no. It's a 40%+ miss - you should never be over a 5% miss max and in this market your first offer should be UNDER market price each and every time in hopes to catch a deal.

Now, I am sorry about the fussing but I hate to see people get jerked around as it looks like you are getting.

I was born in Hollywood some 62 years ago (South Broward High 1966) and have many friends there if you need a Realtor. Just Call me.

1 vote
Al Akerman, Mortgage Broker Or Lender, Lakewood, NJ
Tue Dec 15, 2009
Please speak to your attorney about this issue.

If your appraisal came in at 50k, the bank will not loan you more than that. The whole purpose of the appraisal is for the bank to know the value of the home so they can make sure that they aren't lending you too much money.

The bank in your case will deny the loan based on the appraisal.

Apparently you have a mortgage contingency in your contract, so you should be protected.
1 vote
Diane Loveri…, Agent, Pompano Beach, FL
Tue Dec 15, 2009
Hi Luis,
The lender will not lend you more money than the property is worth, therefore you can be released from the contract and get your deposit back. Otherwise the seller would need to come down in price.

Realize that real estate is not a science. Maybe the appraisal is wrong - it happens all the time. Are you working with a realtor? What do they estimate the value to be? If it is higher than the appraisal, perhaps they can challenge the appraisal. Good luck.

Diane Loveridge
Majestic Properties
(786) 210-3449
1 vote
Jennifer Bee…, Mortgage Broker Or Lender, Corte Madera, CA
Sat Dec 18, 2010
If you were doing a Homepath loan you would not have had an appraisal. They do market analysis before they set the price. You may have gotten a bad appraisal. It does happen
0 votes
Dan Chase, Home Buyer, Texas City, TX
Tue Dec 15, 2009
3 options remain.
1 pay out of pocket more than the place is worth.
2 have the seller agree to take the appraised price only
3 walk away because you can not finance the $71k price.

2 or 3 are the only ones I would consider trying.

You can not obtain $71k worth of financing. That means your financing contingency was met.

I keep reading that appraisals are coming in lower than people (sellers, realtors) expect. It appears the appraisers win in this game. If it is a fha loan the value sticks to the property for several months.

Either the appraiser has to appraise the property for a given price (so the bank will lend) or the seller has to drop prices. That is the current reality we live with.
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more