Under contract for $320,000 and the house appraised for $305,000. So what happens now?

Asked by Rachel C., Oakdale, NY Wed Mar 6, 2013

I'm doing a regular conventional mortgage. The seller does not want to reduce the price because they feel like it's still worth $320,000. What are my options? I still want the house.

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Javier Menes…, Mortgage Broker Or Lender, Melville, NY
Wed Mar 6, 2013
Hate it when this happens. If you decide to move forward, you're pretty much OVERPAYING for this house. I understand that the house is one you really want, but if you could put that aside for a moment, are you really ok with the fact that you'll have to pay an additional $15,000 for this house when other buyers will pay $305,000 in the same are for the same house? It's just not financially smart, in my opinion.

I think that if you decided to pay not a penny more than $305,000 for the house, the seller would be a fool not to reduce their price by $15,000. If the listing agent doesn't advice their seller of the same, they would be foolish as well. Again, I'm sure sure Realtors will disagree with my way of thinking but that's just how I feel.

If you decide to move forward with the $320,000 offer, speak to your Loan Officer. This will have an impact on your mortgage. You basically need $15,000 out of pocket BEFORE your down payment and any other closing costs you were coming out of pocket with. So if you were putting a 10% down payment, meaning you were financing 90% of the price, before you only needed $32,000 but now you need $47,000. That's a significant difference.

Javier Meneses
Senior Loan Officer
NMLS #23130
310 Crossways Park Drive
Woodbury, NY 11797
(516) 606-9648
4 votes
Ralph Windsc…, Agent, Hauppauge, NY
Tue Mar 19, 2013
Unfortunately, appraisals are not an exact science. They are opinions given by appraisers using cetain guidelines but they are given a certain level of latitude. In many cases, if you got two or three appraisals on the same property, those appraisals may vary as much as 25%. If you still want the house and will be there for the long haul, it might be worth it for you to move forward. Speak to your mortgage rep to see what your options are. Good luck!
0 votes
De Vonte Wil…, Agent, East Point, GA
Thu Mar 7, 2013
Hello Rachel. You can always re-negotiate the purchase price down to the appraised price of $305,000. Your Agent should make it a strong point to the Sellers Agent, that the home is not worth the $320,000 as everyone has originally thought. The numbers do not lie. If you still want the house and the Seller is not willing to budge, you could always put down a higher down payment to cover the $15,000 difference. Whatever you choose to do, get the counsel of your Agent and Attorney.

Good Luck!

I hope this answered your question! If you have any further questions, please feel free to contact me by the ways below.

Wishing you all the best,

De Vonte Williamson , LSA
Proudly Serving Long Island
Coldwell Banker Residential
"I Stand Behind Getting You Results!
0 votes
Tammy Benkwi…, Agent, Somers, NY
Wed Mar 6, 2013
Maybe the appraisal is not correct? Have you looked at similar homes that sold in the area?

Hey, the appraiser may be completely correct and the home isn't worth the contract sales price.

The appraiser is not the only voice when it comes to value of a house. But the facts have to be on you side.

The value of a property is whatever the market is willing to pay for it. If the appraisal is correct and the seller doesn't want to reduce the price, someone can pay the difference.

Given the shortage of homes on the market, we may soon start to see more of this.
0 votes
Gail Gladsto…, Agent, 11743, NY
Wed Mar 6, 2013

You can put in more cash if you have it.

The reality is, unless they sell the house to someone with more cash down, no one is going to get a mortgage with this appraisal. The Sellers are being unrealistic; their Realtor should explain the facts of life to them. It is not what they feel it is worth and never will be.

I understand you want the house, but if it were me, I would walk away and hope they get the message. Why would you want to pay more for a house than it is deemed worth.

0 votes
Marge Bennett, Agent, Fort Myers, FL
Wed Mar 6, 2013
if you have the extra $15k and the house is worth it TO YOU, and you are planning to stay there for a number of years, go for it.
0 votes
William Rugen, Agent, Holbrook, NY
Wed Mar 6, 2013
If the seller doesn't want to reduce price then unfortunately it seems you're going to put down more money. Talk directly with your lender to see what you could do but most likely that is your only option if you still wish to move forward.

What your seller doesn't understand is that if you walk away from the deal, he's going back on the market and he's not going to sell for 320,000 unless it's a cash buyer or someone with substantial down payment.

Ask your agent to request a sit down with the listing agent and homeowner. Maybe some sense can be talked into the sellers.

Best of luck
0 votes
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