Is it common that the appraisal will be lower than the PP?

KatiKapral · February 2013

My husband and I have had our closing date pushed back several times while we have been waiting on the results of the home's appraisal. Our bank keeps promising they'll be in our hands, "tomorrow" except tomorrow hasn't come yet and it's been a couple weeks. All of this time to think about it has us wondering, if the appraisal comes back that the value is in fact below our accepted offer, what happens? We are doing a VA loan, I'm not sure if that is a vital detail in this question, but I'll include it.

We are just wondering how much further that may extend the process and really what the process even is for something like that.

Any and all information would be appreciated. Thank you.

amber0389 · February 2013

I'm pretty sure a bank will not give you a loan for more than the house is appraised at. So if the house does appraise less than the purchase price, you would need to bring the difference to the table at closing.

atlcatlover · February 2013

amber0389:
I'm pretty sure a bank will not give you a loan for more than the house is appraised at. So if the house does appraise less than the purchase price, you would need to bring the difference to the table at closing.

Or the seller agrees to lower the purchase price to match the appraisal amount. But pp is correct that the bank will not write a loan for more than the house is worth.

TX-Bride · February 2013

We had a clause in our offer/contract that if the house appraises less than the agreed upon price, the contract is null. Because we didn't want to pay more for a house that's appraised less, you want to have equity in the house and not be upside down from the beginning.

KatiKapral · February 2013

That makes sense. Also, with a VA loan, we are aware the bank will NOT allow us to purchase a home for more than it's appraisal. I'm just worried about what would happen. I don't want to lose the house and this process already seems to be taking forever. We live in northern Utah and are from Wisconsin. The popular style of homes here are multi/tri levels and we just can't follow the trend. We want what we consider to be more traditional, a 2-story house. This is the only one within our budget with the right number of rooms and bathrooms for at least 50 miles. First thing tomorrow I'm going to call and harass the bank, AGAIN, for the appraisal results.

LoveKiss · February 2013

If your realtor did his/her homework properly and got the right comps for your home, and if you offered in accordance with what the comps were telling you, you should be on fairly safe ground with the appraisal. The appraiser is going to be looking at the same basic data that you did, and will likely come to a similar conclusion. The only time you are at real risk is if there have been other comparable sales in your area that closed between the time of your offer and the time that the appraiser pulls comps, and those sales are significantly lower than the ones that you based your offer on.

Is it common that the appraisal will be lower than the PP?

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