What Happens if the House You're Buying Does Not Appraise?

By
Real Estate Agent with Coldwell Banker, 170 N Main Street, New City NY 10956
http://actvra.in/NxM

What Happens if the House You're Buying Does Not Appraise?

If you are purchasing a home and financing it with a mortgage, the bank will require an appraisal of the property to determine its market value before committing to a mortgage.  They determine the dollar amount they are willing to lend you based on the appraised value of the house as opposed to the purchase price of the house.  Hopefully the two numbers will be one and the same. 

But, what happens if the house you're buying does not appraise, and the appraised value is less than the agreed upon purchase price?  You've got several options.

  • You can renegotiate the deal and try and get the seller to drop the price to the appraised value.  This is the best option.  It will allow the sale to home redgo thru as planned.  If the seller refuses to drop the price, he runs the risk of losing his buyer and in all probability the next buyer that comes along will have the same problem of the home not appraising.  No one wants to purchase a home at a higher than market value price.
  • The buyer can make up the difference between the appraised value and the agreed upon sale price by putting extra cash down.  Of coarse this is only an option if he has the cash and if he's willing to purchase a home at a higher than market value price.  If this is the house of his dreams, then it may just be the seller's lucky day!
  • The seller and the buyer split the difference and meet somewhere in middle.  The seller reduces the price somewhat and the buyer brings cash to the table. This is the most frequent solutions.
  • You can cancel the transaction.  If all else fails and your purchase offer was contingent on mortgage and appraisal, then you could walk away from the deal and still get your deposit money back.

If none of the above options work there still remains one other possibility.  The buyer can try to get the appraisal adjusted.  Appraisals are based on the choice of comparable sales within the past 60 days within a radius of a few miles, and within 10% variance in size.  If you know of any homes in the immediate area that are pending sales, similar in size and value, that the appraiser overlooked, you can offer it up for consideration.  It's worth a try!

Hopefully, you and your realtor have done your homework and your offer based on the current market stats will have no appraisal issues. But, not to worry if there are glitches; most can be remedied.

If you're looking for a home in Suffern NY or anywhere else in Rockland County, I'll be happy to be your guide and help you navigate through the home buying process and smooth the bumps along the way..

 Flickr photo by nikcname

Posted by

Lora "Leah" Stern - Your Rockland County, NY REALTOR of Choice - (914) 772-4528

Your Rockland County, NY Real Estate SpecialistLeah Stern Signature Photo

Lora "Leah" Stern
Real Estate Salesperson
Coldwell Banker Residential Brokerage
(914) 772-4528 CELL
(845) 634-0400 OFFICE
(862) 345-2463 FAX

If I can assist you in any way with your real estate needs in Suffern, NY Rockland County or the surrounding areas, please feel free to contact me by phone at (914) 772-4528, email me at Leah.Stern@cbmoves.com or visit my website .

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Re-Bloggged 8 times:

Re-Blogged By Re-Blogged At
  1. Christine Smith 01/19/2011 02:01 PM
  2. Brandon & Grace Yee 01/19/2011 04:26 PM
  3. Cindy Jones 01/19/2011 06:53 PM
  4. Melissa McKinney 01/19/2011 09:47 PM
  5. Markita Woods NMLS#190699 01/20/2011 09:47 AM
  6. Kathleen Cooper 01/20/2011 10:35 AM
  7. Karen Bernetti 01/21/2011 09:06 PM
  8. Pam Dent 01/26/2011 07:23 AM
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Topic:
Home Buying
Location:
New York
Groups:
1st Time Buyers
Advice for Buyers
Advice for Sellers
Buyer Information - What Buyers Need to Know in Today's Market
Posts to Localism
Tags:
appraisals
low appraisals
home does not appraise
suffern ny real estate

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Anonymous #63
Anonymous
Dawn

I am aware that appraisals typically come in right around the purchase price (when worth it obviously). Well our appraisal was done & all looks great except for a huge error by the appraiser....he wrote down the wrong sale price ($4000 less that the actual one). The appraisal came back over the incorrect purchase price. He said he went back to the house and took pictures of updated electrical panel etc and corrected the purchase price and re-submitted a new appraisal. I am so upset that his error may cause us to lose our loan approval.

Any advice?? Everything has gone perfect up until this point:(

December 10, 2011 10:58 PM
Rainmaker
493,806
Lora "Leah" Stern 914-772-4528
Real Estate Salesperson
Coldwell Banker, 170 N Main Street, New City NY 10956

Dawn, I might be missing something here but if the appraisal came in higher than the incorrect purchase price what. is the problem?  The differential (if there still is one)would be less than the $4000 that represented the actual price.  I'd wait and see what the new appraisal yielded and then if there is a problem renegotiate.  Maybe you could get the seller to absorb the difference - since loosing this deal would set him back more than the differential of that small amount.

December 12, 2011 11:50 AM
Rainer
157,544
Dave Sullivan
The Real Story on Your Credit Score - TheCreditGuy
www.TheCreditGuy.TV

Excellent information I will forward it if that is ok? thank you!!!

November 21, 2012 12:56 PM
Rainer
157,544
Dave Sullivan
The Real Story on Your Credit Score - TheCreditGuy
www.TheCreditGuy.TV

Excellent information I will forward it if that is ok? thank you!!!

November 21, 2012 12:56 PM
Rainmaker
493,806
Lora "Leah" Stern 914-772-4528
Real Estate Salesperson
Coldwell Banker, 170 N Main Street, New City NY 10956

Dave - Thanks and no problem; feel free to pass it on.

November 21, 2012 04:30 PM
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Rainmaker
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Lora "Leah" Stern 914-772-4528

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