house appraisal... what happens when it's less?

we are selling our house, the buyers agreed to buy the house at the price, it's more than the appriasal will be but we can't sell otherwise becuase it's what we owe on the house. however after they put their downpayment down the mortgage will be LESS then what we think the appraisal will be? is that okay?

Re: house appraisal... what happens when it's less?

bank might not approve the mortgage

and in that case the buyer can either pay more out of pocket to cover it

or not...(sorry)

Re: house appraisal... what happens when it's less?

If the buyer chooses not to cover the difference btw what the appraisal is and the contract price chances are no other buyer will either.....

Re: house appraisal... what happens when it's less?

If they want the house for less you don't have to accept the appraisal price.

You can look for another buyer as it is very possible another bank will bring in another appraiser that will give you a different amount (for better or worse).

What is the difference in price between the appraisal and sales price? Is it a lot?

Re: house appraisal... what happens when it's less?

I bought my house in 2007. The purchase price was supposed to be $405,000. The bank appraised it for $380,000. We either had to come up with the extra money or walk away. They paid for another appraisal and it came back $7500 more. The sellers couldent walk away because they had already put a downpayment on another house so we ended up getting the house for $387,500. The sellers were ****** but I was not paying ONE dollar over the appraised value!!

Re: house appraisal... what happens when it's less?

I'd be surprised if they were still approved for the mortgage. But I'd also be surprised if the buyer accepted that in this market.

Message edited 11/18/2009 12:50:44 PM.

Re: house appraisal... what happens when it's less?

Re: house appraisal... what happens when it's less?

you can FM me- but how much do you owe vs what the house is worth?

a short sale might be an option if this doesn't work out

that would at least get you off the hook for the difference if this sale doesn't go thru

Re: house appraisal... what happens when it's less?

this happened to us - with a short sale nonetheless!

the appraisal came in around 8-9k (i can't remember the exact amount) less than what we offered on the house....the sellers bank didnt want to come down to appraisal price...we already had sellers concession for our closing costs in the offer - which basically covered the difference in the appraisal cost and for the sellers bank to come down they would have taken that away and we didnt want to spend all that cash up front to pay closing...so instead of losing the house (after trying to buy a house for over a year!) we decided to pay the original offer amount with sellers concession for closing...

we didnt put up the difference in cash (again, if we had the difference to put up we could have tried to get the house for the appraisal price + us paying our closing) instead we took out PMI - even though we put down 20%....

i think we made the right decision for us...i still look at listings and we still would be living in NY if we didnt get this house....plus i love love love our community and i am so happy we are here, worth every penny....

i have no advice....but if the sellers are putting down 20% they can take out PMI and not have to come up with the difference at closing

Message edited 11/18/2009 2:30:52 PM.

Re: house appraisal... what happens when it's less?

I may be confused but if they put the downpayment and its going to bring the mortgage amount to be borrowed under what the house appraised I thought the bank would still approve since the loan they are taking out to cover the difference is less than the actual value of the home (all banks seem to care about in case they need to liquidate the property )...so technically if they go into foreclosure after buying from you the bank can still recoup their loss. They would however be out their DP.

Re: house appraisal... what happens when it's less?

I was worried about this happening with the house we're going into contract on too. My RE agent is trying to tell me that since we're putting 20% down, the bank is only paying for 80% of the house, so the house only has to appraise for that much, 80% of what we're paying. So if we walk away from it and go into foreclosure, they have our downpayment plus the house will sell for what it appraised for (at least 80%) and they'll still not lose any money on the deal.

Re: house appraisal... what happens when it's less?

How short the appraisal will come in is really what matters. The bank will only be interested in the amount being mortgaged, so if they are putting 20% down, it will only need to appraise for the 80%. Having said that, most buyers do not want to take a house that the "market" is saying is only worth "x", when they will have to pay "y" for it. In most cases the seller does need to come down, sometimes the seller and buyer meet in the middle.

The one thing I do want to mention is that now with the new Tax Credit ammendment, homeowners who have been in their primary residence for at least 5 years, and are moving into another primary residence, are eligible for a $6,500 tax credit. If you are not aware of this new credit, let me know and I will forward you on the information. That might help you, knowing that you will be receiving that money.
If you can stay away from doing a short sale, they take way too long.

Good Luck

Re: house appraisal... what happens when it's less?

Message edited 11/19/2009 10:59:38 AM.

Re: house appraisal... what happens when it's less?

Re: house appraisal... what happens when it's less?

Message edited 11/19/2009 12:53:38 PM.

Re: house appraisal... what happens when it's less?

I was told by our mortgage guy that our house would only have to appraise for the amount we were borrowing in order for the bank to sign off on our mortgage. But he did say that if the house appraised for less than the agreed upon price, we should reconsider our offer. Luckily, that didn't happen.