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Answers (13)
- Vince Curtis, "SoCal Appraiser"
- Contributions:4699
Recent appraisal laws have built a firewall between the appraiser and lender/borrower - basically appraisers can bring in value at any value they think it is. Good appraiser- good value, bad appraiser - bad value.
Having a 10K difference in value vs purchase price may be because of home upgrades, lot premiums or just an appreciating market. As others have said, your LTV is so low the 10K should not be an issue.
Having a 10K difference in value vs purchase price may be because of home upgrades, lot premiums or just an appreciating market. As others have said, your LTV is so low the 10K should not be an issue.
- Robert Bruno, "Robert Bruno Realtor"
- Contributions:700
Since your loan to value ratio is so high, greater than 50% I wouldn't think this would affect your mortgage or the deal.
If that is not an issue and you are seeking a price reduction, I don't think the builder has to reduce the price. The price was agreed to in the contract. Only the mortgage contingency can get you out of the deal. If you want out.
Remember, the appraisal is an opinion of value and they may not be allowed to count things in the home that you value, such as higher quality of cabinets, carpeting, countertops, etc. So, if you don't have a problem with the mortgage loan approval and you love the home, just ignore the opinion of the appraiser and continue on with your transaction.
If that is not an issue and you are seeking a price reduction, I don't think the builder has to reduce the price. The price was agreed to in the contract. Only the mortgage contingency can get you out of the deal. If you want out.
Remember, the appraisal is an opinion of value and they may not be allowed to count things in the home that you value, such as higher quality of cabinets, carpeting, countertops, etc. So, if you don't have a problem with the mortgage loan approval and you love the home, just ignore the opinion of the appraiser and continue on with your transaction.
- Lillian Sako, "Lillian Sako"
- Contributions:10
If you have a contract, read it thoroughly to see if you have any leverage at all. Yes, of course, ask the builder to reduce the price to the appraised value. And, if you are unwilling or unable to walk away, try negotiating for some additional value in the property, such as landscaping, upgraded appliances or additional appliances, even a hot tub! Usually they can obtain these items of value much cheaper than you can, so it is a "win-win."
- Barbara & Debbie Iadreschi, "biadreschi"
- Contributions:4
All you can do at this point is ask the builder for a price reduction. Hopefully the builder will be reasonable, and give you the full reduction, or a portion of it.
Good luck...
- Clarence Williams, "Clarence_Williams"
- Contributions:10
My advice is to always work with a Realtor. It's always good practice to have someone to help walk you through these matters of concern. You have given the builder the advantage of knowing too much about your down payment. The appraisal will stand so you should ask for lower price relative to appraisal report. There should be no reason to pay more to ratify this deal. All the best.
- Celeste Starmer, "W.VolusiaHouseHunter"
- Contributions:47
I agree you should ask for the builder to drop the price $10,000.00... doesn't hurt to ask.
- Russo Jaime, "jsrealtor.SC"
- Contributions:6
Simply talk with the builder. I am sure if this builder is reputable, he will try to come to an appropriate meeting of the minds.
- Deborah Garvin, "loanmonarch"
- Contributions:438
I would start with a review of your original contract. There may be a clause that addresses final value and, if so, the contract will be the determining factor. If not, and/or if there is an exit clause you have an opportunity to reach an agreement with the builder. If the builder is aware of your financing (and the 100K down payment) it is probably pretty unlikely they will negotiate the full 10K because they (builder) knows your financing is not in jeopardy...most sales contracts will only allow for an exit and return of your earnest money if you fail to get financing. Correct info that the lender will base loan to value on lessor of sales (contract) and appraised value. If appraiser was ordered by lender, the advice to "get another appraisal" is completely incorrect because HVCC ruling requires that the lender order the appraisal directly with no interaction from loan officer or consumer. Best of luck.
- Bob Shallenberger, "FHA Refi Specialist"
- Contributions:22
You certainly have cause to ask the Seller to lower his price by the $10,000. If your contract provide you with an "out" if the property appraisal comes in lower than the contract sale price, it is likely that the seller is prepared for this as a possibility. You might have less leverage if the seller is aware of your financing arrangement as the difference in appraised value is not adversely affecting your ability to borrow...so keep that in mind.
The lender will lend, but they will go off the lesser of appraised value or purchase price. I recommend that you negotiate with the builder and get them to lower the price.
- Jim Basquette CRS, CNE, "Jim Basquette"
- Contributions:1231
I think you have a good reason to ask the seller/builder for a price reduction. You cannot buy with the price as it is, so if the seller/builder wants to sell, they will need to lower the price. Explain to them that even if they found another buyer, they would run into the same problem with an appraisal.
- Honestly Realty
- Contributions:31
With 100k down I do not see why the appraisal is causing any problem.
You should be able to finance the extra $10,000. unless you are at your limit payment wise. Just remember an appraisal is one persons opinion of value.
You should be able to finance the extra $10,000. unless you are at your limit payment wise. Just remember an appraisal is one persons opinion of value.
- Mark W Hunter, "Mark W Hunter"
- Contributions:53
If you need the loan, then the price has to come down. You can try and get another appraisal, but it seems to be hard these days to get one appraiser to overturn anothers opinion of price. Bottom line is, if it doesn't appraise, the lender won't lend. It's a great opportunity for you to get the seller to lower the price.
New home appraisal 10K under selling price
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