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Appraisal lower that purchase price?
We have entered into an agreement to buy a home at 344k - $110 per square feet. I am nervous the appraisal will come in lower than this.
The 4 houses that sold recently in the neighborhood have been between 315-320 but the price per square feet has been $98, $126, $103, $111. Our house happens to be larger than all of those homes so the sale price is more. We also have a 1000 square foot basement and some of those homes only have a 600 sq ft basement. However the basement doesn't count in terms of price per sq feet
We do not want to lose the house but don't want to pay over the appraisal. There is a backup offer on the house so I'm sure the sellers are confident.
Anyone been through something similar? What was the outcome? The sellers are moving out of state soon so that works in our favor.
Re: Appraisal lower that purchase price?
Yes, I have been through this twice this year. We built a house (production builder) that appraised $20k less than contract. The builder refused to negotiate and we walked. It is still on the market, completed in April.
The second house, the sellers and their REA were very cocky and emotional. The house didn't appraise and they would not negotiate. It failed appraisal by $12k. After letting it sit on the market for 2 more months, we went back and offered them $7k less than our first contract, it did appraise this time and we close tomorrow.
Unless the sellers locate a cash buyer or you are willing to pay the difference in cash, the bank will only finance to appraisal. I would never suggest paying above appraisal.
This happened with the house that we bought....it was a short sale and we offered 300k (which was accepted). The sellers bank ordered a BPO and the BPO came back at 255k, so the sellers bank lowered the price. Not sure what comps they used since other houses in the area were selling for 300k and up (a small few were less than 300k, but nothing lower than 270k) so guess it was our lucky day. When we got our appraisal done for our mortgage, it came back at 285k.
So yea, I guess if your appraisal comes back lower, then the seller either has to lower the price, or you would have to make up the difference, although I'm not sure I would do that unless it was a house that I really loved, then maybe.....