What happens if appraisal comes back $25K less that than the offering price on a short sale?

Asked by Icu2, Germantown, MD Mon Aug 17, 2009

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BG, Home Buyer, Phoenix, AZ
Fri Feb 11, 2011
If you believe the appraiser is the expert in his/her field (over agent BPO) then you are over offering by 25K. Your buyer agent missed big time in this case (in your best interest). 25K is a lotsssssssssssss of money. Ask your agent to negotiate it down based on the latest appraisal or let the deal going south during financing. good luck.
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Abe Mills, Agent, Greenville, SC
Mon Aug 17, 2009
Hopefully the deal was contigent upon apppraisal. If so I would offer the bank appraised price, and they are likely to take it. If they don't and you still want it, you will have to come up with the 25k difference.

Good Luck!
Web Reference:  http://www.abemills.com
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The Roskelly…, Agent, Gambrills, MD
Mon Aug 17, 2009
I just had this happen and can only speak to my specific circumstance which was on a VA short sale. I listed and sold the property for $280,000 but it only VA appraised for $259,000 and the lender agreed to accept that as the pay off as it was 100% of appraised value. Lenders base their acceptance or rejection of a short sale on the amount owed and the appraised value so they are going to see that number as well.

If you are the seller you should be fine as the bank works with appraised value. However, the shortfall you are requesting will be higher and there could be tax consequences for that. If you are the buyer, you will not be able to secure a loan for an amount higher than the appraised value so you should have your Realtor prepare an addendum to lower the contract price and you got a better deal. If the appraisal was FHA or VA the seller and their bank will not be able to have it re-appraised for 6 months so that value is locked in for any government backed loan. That should make them receptive to selling it to you at the lower price. Best of luck!

p.s. In our area you don't need an appraisal contingency addendum to protect your rights (although we do use them). If your loan is not approved because the appraisal came in low and you don't have or want to pay cash over appraisal your financing contingency should allow you to terminate as long as the contract specified the loan type and down payment. Again if it's a governmnent (FHA or VA loan) MD has a built in clause that requires appraisal at contract price. *** Always check with an attorney on any contractual issues.
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Darlene Deca…, Agent, Severna Park, MD
Mon Aug 17, 2009
The bank has the option of taking the appriased value. If not your financing falls apart hence the deal falls apart. Or if you have an extra 25K you can bridge the gap. Are you going through this curretly?
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Tracy Johns, Agent, Cincinnati, OH
Mon Aug 17, 2009
If the purchase contract has a contingency that reads, basically, that the property has to appraise at or above the agreed upon purchase price you, as the buyer, sit back and wait for the bank/seller/seller's agent to reduce the price somewhat (you would have to agree to this), all the way to the appraised value, renegotiate any seller closing cost concession (again, you'd have to agree to this), request a second appraisal or put it back on the market. If your financing is FHA then so is the appraisal. FHA appraisals stay with the property for 6 months--so in that situation they would not be able to sell it to anybody else using FHA financing at a higher sale price for quite awhile.
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