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maybemommy10
Big Brothers to Be !
Member since 2/10 3868 total posts
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If your home does not appraise...
Our buyer wants to ad a stip to our contract that if our house does not appraise for as much as he is borrowing from the bank, that we need to lower the price. The homes in our area that sold recently are 60-70k less bc most of them are $hit and need to be gutted totally. Where as our home is DONE, move in condition, updated heat/electric/granite/ PVC fence, etc. I get that we will take a loss, the price we agreed upon is MUCH lower than what our house is worth. We are losing money but if this house comes in 20k lower than the amount we agreed upon, what can i do. Right now, i told our agent to tell him we are not signing ANY contract with that stip. Here is the amount of our house, if you cant afford it go buy a house for 0k less that needs to be gutted, good luck with that.
WWYD?
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Posted 10/24/12 3:33 PM  |
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Prudential Douglas Elliman Real Estate
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KaKa2323
Got my miracle
Member since 9/11 1465 total posts
Name:
K
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If your home does not appraise...
I would think you would need to lower the house if it doesn't appraise for what you want? Not sure how all loans work but I'm getting an FHA and we are waiting on the appraisal. If the house comes in more than it appraises for the bank will not give me the mortgage unless I pay the difference out of pocket, which is not happening. HTH
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| Posted 10/24/12 3:45 PM |
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Karen
Just chillin'!!
Member since 1/06 9690 total posts
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Karen
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Re: If your home does not appraise...
I wouldn't be comfortable putting that stipulation in.
That being said - unless you have an all-cash buyer, you will run into issues if the house appraises less than asking. No bank will give a mortgage that exceeds the appraisal value, so unless the buyer has the cash to make up the difference, the deal won't go through unless you lower your price.
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| Posted 10/24/12 3:50 PM |
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Gigi143
LIF Toddler
Member since 6/12 435 total posts
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Re: If your home does not appraise...
So I literally just went through this, and it was heartbreaking. I was on the other side, we didn't even get to contract because we realized that the house wouldn't appraise for what we needed it to. The house is in our price range, but the comparable around are all less than the actual house. And since we were paying full price we had to have it appraise more for the house since we were doing a seller's concession. It is so frustrating, especially we were in love with the house, and my daughter literally cried when we told her we weren't going to buy it. We could afford the 20k more, but we can't help what the house appraises at, and if it doesn't appraise where we need it, then what are we going to do. I don't think it's the buyer's fault, they are probably rolling in closing costs.
Message edited 10/24/2012 3:56:44 PM.
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| Posted 10/24/12 3:51 PM |
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ElizaRags35
My 2 Girls
Member since 2/09 20494 total posts
Name:
Me
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If your home does not appraise...
I was on the buyer side of this. We had it in our contract that if the house didn't appraise, we would either have to renegotiate or walk away. The house did not appraise and we couldn't put in the full difference. We ended up renegotiating and put in a few extra thousand. At first we weren't sure if they would be willing since the purchase price was well below the original asking price. We were prepared to walk away if we needed to and in the end, the sellers decided that it would be better to take a few thousand less than to have to restart the whole process.
I guess what you have to do is weigh your options. Has your house been on the market for awhile? Did you have a lot of offers?
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| Posted 10/24/12 4:10 PM |
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AJ92411
LIF Zygote
Member since 10/12 29 total posts
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If your home does not appraise...
We're building that into our contract now... and Gigi is right - it's because we are rolling in closing costs. If it's no more than our closing costs, we're going to come up with the money, but if it's more, we've asked to renegotiate. So far the homeowner has been cool with it. Comps in the area are much higher than what we're buying at, so I think they are confident it will appraise.
Something to note - if the comps in the area are low, but were in bad condition you should be fine. They base everything off what was recently sold in the area.
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| Posted 10/24/12 4:10 PM |
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Re: If your home does not appraise...
Posted by Karen
I wouldn't be comfortable putting that stipulation in.
That being said - unless you have an all-cash buyer, you will run into issues if the house appraises less than asking. No bank will give a mortgage that exceeds the appraisal value, so unless the buyer has the cash to make up the difference, the deal won't go through unless you lower your price.
I agree - I don't think it's adviseable for you to agree to add that term to the contract (and I doubt your attorney would think it's a good idea). Because then you are locked into one option - lowering the price - and there may be other options, such as renegotiating.
BUT - It is true that, if the house doesn't appraise, the bank is only going to lend the buyer so much money (based on the loan-to-value ratio). If the buyer can't get the requisite financing, the buyer can back out of the deal and get their down payment back (as per the standard mortgage contingency clause).
As a practical matter, when the house doesn't appraise:
1. The seller can lower the price to the appraised value;
2. The buyer can sometimes come up with extra cash to cover the difference (but honestly, this is rare - why would a buyer want to do this? and most aren't in a position to anyway);
3. The buyer and seller can renegotiate, and make it work by both agreeing to kick in a bit of $ (this is common);
4. The appraisal can be challenged IF it seems way off base (not supported by recent comps in the area); or
5. The deal dies.
If the deal dies, you have to realize the appraisal issue may come up again with any other buyers. If the appraisal comes in significantly below your desired price and the comps in the area don't support your price, other appraisals will likely find the same way. They all use the same standard appraisal form and critera. And while you talk about how similar homes in the area are in more dated condition, be aware that a lot of what an appraiser is basing his valuation opinion on are objective facts, such as lot size and interior square footage, number of rooms, whether there are amenities such as a garage (and what size), and a basement (full or partial, finished or unfinished). Condition is relevant, but not as much as other factors.
Also, if your current buyers are getting an FHA loan, the appraisal will stay with your property for a certain period of time. It used to be 6 months, but now I think it's 4 months (120 days). So say you walk away from these buyers, and then a month later you find another buyer. If your second buyer is getting an FHA loan, the bank will need to use the appraisal from the first FHA buyers, which came in too low.
So while it's probably best to cross that bridge when you come to it, you need to be aware of the potential consequences of a low appraisal so you can best assess your options.
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| Posted 10/24/12 4:13 PM |
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If your home does not appraise...
The house I wanted appraised lower.
I paid 6k more.
I didn't care what it appraised for...I couldn't let the house go for 6k.
Sometimes buyers do that - if they really love the house.
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| Posted 10/24/12 4:39 PM |
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maybemommy10
Big Brothers to Be !
Member since 2/10 3868 total posts
Name:
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Re: If your home does not appraise...
Posted by EatingMyVeggies
The house I wanted appraised lower.
I paid 6k more.
I didn't care what it appraised for...I couldn't let the house go for 6k.
Sometimes buyers do that - if they really love the house.
They love the house, and even THEY know that it is worth more than they are paying. BUT they are getting a FHA loan and they are putting very little down. basically, i dont think they can afford the house and want to get us to the closing table and force us to accept whatever bc at that point they are hoping we are too far in and are commited to a new house.
I didn't know they keep the appraisals on record for that long. They have not gotten it appraised yet, and now im thinking i should just cut the deal now, before we waste more time. I had another potential buyer we let go bc this guy seemed more solid ugh, so frustrating.
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| Posted 10/24/12 4:53 PM |
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ElizaRags35
My 2 Girls
Member since 2/09 20494 total posts
Name:
Me
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If your home does not appraise...
Yes but sometimes an additional 6k or whatever it is is just not feasible.
Our house appraised for 5k less than our contract price. We split the baby and they came down $2500 and we went up $2500. It wasn't easy but we did it.
I LOVE my house and I'm so happy that the sellers were willing to come down but if they didn't, I would have rather walked away from the house I loved than be an additional 5k in the hole.
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| Posted 10/24/12 5:21 PM |
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maybemommy10
Big Brothers to Be !
Member since 2/10 3868 total posts
Name:
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Re: If your home does not appraise...
Posted by ElizaRags35
Yes but sometimes an additional 6k or whatever it is is just not feasible.
Our house appraised for 5k less than our contract price. We split the baby and they came down $2500 and we went up $2500. It wasn't easy but we did it.
I LOVE my house and I'm so happy that the sellers were willing to come down but if they didn't, I would have rather walked away from the house I loved than be an additional 5k in the hole.
I guess it comes down to what I would rather do. At this point I rather just stay. I wouldn't lose the house I love for 5k, (what is 5k spread out over 30 years !) we shall see how he feels !
thank you everyone for your advice and input !!!!! especially Christine ! I had no idea an FHA appraisal stays with you for 4 months !!!
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| Posted 10/24/12 5:34 PM |
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ElizaRags35
My 2 Girls
Member since 2/09 20494 total posts
Name:
Me
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Re: If your home does not appraise...
Posted by maybemommy10
Posted by ElizaRags35
Yes but sometimes an additional 6k or whatever it is is just not feasible.
Our house appraised for 5k less than our contract price. We split the baby and they came down $2500 and we went up $2500. It wasn't easy but we did it.
I LOVE my house and I'm so happy that the sellers were willing to come down but if they didn't, I would have rather walked away from the house I loved than be an additional 5k in the hole.
I guess it comes down to what I would rather do. At this point I rather just stay. I wouldn't lose the house I love for 5k, (what is 5k spread out over 30 years !) we shall see how he feels !
thank you everyone for your advice and input !!!!! especially Christine ! I had no idea an FHA appraisal stays with you for 4 months !!!
5K over 30 years wouldn't have been an issue. LOL. That's nothing! We would have had to come up with an additional 5K for closing like a month later and that was definitely not a possibility. We did a seller's concession.
Good luck with whatever you decide to do!
Message edited 10/24/2012 5:41:16 PM.
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| Posted 10/24/12 5:40 PM |
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Re: If your home does not appraise...
Posted by maybemommy10
Posted by ElizaRags35
Yes but sometimes an additional 6k or whatever it is is just not feasible.
Our house appraised for 5k less than our contract price. We split the baby and they came down $2500 and we went up $2500. It wasn't easy but we did it.
I LOVE my house and I'm so happy that the sellers were willing to come down but if they didn't, I would have rather walked away from the house I loved than be an additional 5k in the hole.
I guess it comes down to what I would rather do. At this point I rather just stay. I wouldn't lose the house I love for 5k, (what is 5k spread out over 30 years !) we shall see how he feels !
thank you everyone for your advice and input !!!!! especially Christine ! I had no idea an FHA appraisal stays with you for 4 months !!!
No problem! It's only true of an FHA appraisal, but you said your current buyer is an FHA buyer, so it's relevant.
Good luck. Sometimes it's surprising how appraisals work out. I've sweated out a few that have actually come in for the full contract price. Appraisers rely on data, but there are still subjective elements involved since no two houses are identical. Valuing a home is an "inexact science" at best!
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| Posted 10/24/12 5:45 PM |
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Re: If your home does not appraise...
When we sold our appraisal came in $10K less than agreed upon price.
We had already dealt with 1 large issue that we took care and another minor one that ended up costing us a total of $3K. I was done putting money into this house. So we told them that we would come down $4K from agreed price and we were not fixing something else they wanted done. They agreed. It wasn't an FHA loan though.
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| Posted 10/24/12 6:00 PM |
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