Not sure who your lender is, but I feel comfortable telling you that if the appraised value came in 8% less than contract price, it's safe to assume that you're overpaying for the house. With the way the market is today, you can expect to pay close to market value. Your sales contract should have an appraisal contingency protections for you in place so that if the appraisal doesn't come in high enough to cover the sales price you can have an out of the contract. This is something you want to speak to your attorney about. At the end of the day you have options, the first is to ask the seller to reduce the sales price to match the appraised value and amend the purchase price on the sales contract. The seller might or might not be willing to do this, if they're smart they would. Your other option is to cancel the contract and continue searching for properties, as long as you have the appraisal contingency in the current contract. The other option you have is to come up with the additional 8% out of pocket or reduce it from your total down-payment. So if you were putting a 20% down-payment, now your down-payment is 12%, or you can now put a 28% down-payment just to be at a 20% down-payment with your lender, makes sense? If you have any questions or if there is anything I can do to help, please feel free to call or text me anytime, no strings attached.
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Assistant Director of Sales
ACADEMY MORTGAGE CORP
105 Conklin Street
Farmingdale, NY 11735
(516) 606-9648 Cell
(631) 227-3258 Office
(516) 584-7138 Fax... more
All home prices should be based on real numbers that represent the most recent market activity in a given location.
If a bank appraisal is a current one, I can think of no better way to price a home than by beginning with this information. Any future buyer, needing to purchase by financing would be required to have an appraisal of their own in order to obtain their funds.