We were recently told that our appraisal was below the purchase and sale agreement price and now the VA loan

Asked by We3, Carver, MA Thu Aug 6, 2009

will not accept it. Looking at the sales of homes of comparable value we fear that we may have offered too much originally. Will we be able to put in a new offer and will we have to do the inspection /apppraisal all over again if it is accepted? thank you

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Bobbie Files’ answer
Bobbie Files, Agent, Norton, MA
Fri Aug 28, 2009
Hi We3,

All FHA / VA loan purchasers REQUIRE an addendum to the contract that reads something similar to:

"Buyer shall not be obligated to complete the purchase of the Property or incur any penalty or forfeiture of the
Earnest Money Deposit or other down payment, or otherwise be obligated to purchase the Property, if: (a) for a VA loan, the Purchase Price exceeds the reasonable value of the Property established by the VA Certificate of Reasonable Value or VA appraisal; or (b) for an FHA loan, the Purchase Price exceeds the appraised value of the Property (excluding closing costs) established by the FHA appraisal. Buyer shall, however, have the right to complete the sale without regard to the amount of the appraised valuation made by the applicable FHA or the VA. The appraised valuation is used to determine the maximum loan that FHA will insure or VA will guarantee. Neither FHA nor the VA warrants the value or condition of the Property. Buyer should satisfy himself/herself that the price and condition of the Property are acceptable. Buyer acknowledges that an FHA/VA appraisal does not constitute a property inspection."

Your mortgage professional or your real estate agent should have had the VA Addendum incorporated into your purchase contract. The seller has the right to either A.) Lower the sale price to the appraised amount or B.) refusing to and refunding you your deposits.

If the seller chooses option A the contract gets revised without the need for an additional appraisal or inspection.

I hope this helps and best of luck!
Web Reference:  http://www.BerkleyMass.com
0 votes
Kelli Cassidy, , 01950
Thu Aug 6, 2009
I had a similar situation where the buyer had a VA loan and 3 days before closing the appraisal came in under the contract price, All contigencey dates had passed and we did have a commitment letter from the bank, I was on the seller side and my seller did come down the 1600. to sell to the buyers. However if they did'nt they could have kept the deposits. In your P&S did you write in must appraise for contract price or all deposits are to be returned to the buyer? I would have your agent discuss with the sellers agent the situation to see if you can come to an agreement, they may come down depending on the difference.
0 votes
Richard Power, Agent, Scituate, MA
Thu Aug 6, 2009
We3, it's a bit difficult to answer your question based on the information provided in your question. Most standard Purchase & Sale Agreements have contingency clauses which provide you with a way out of your agreement should you not be able to get your mortgage. If you have such a contingency, and are responding within the required time frame, you should be all set. Hopefully your seller will be willing to renegotiate their price based on the latest appraisal. With regards to an additional inspection/appraisal, that will need to be determined by your lender. My suggestion would be to involve your Realtor or Attorney as soon as possible.

Good Luck

Dick
Web Reference:  http://www.richardfpower.com
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