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if I offer more $ for a condo (REO) than the appraisal value, am I obligated to pay the full offer

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November 03 2012 - Rancho Cucamonga
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Simple answer read the contract most time you would be able to get your deposit back however HUD homes and some banks will require you make up the difference in cash.
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November 27 2012
When you put an offer in on a property, you are obligated to that price unless one of two things happens.  You put in the offer that the sale is contingent upon the appraisal being no less than your offer price,  OR if you are obtaining financing,  then your mortgage will not be approved if the appraisal is lower.  Once this happens, it is up to you if you can afford and want to pay more for the property.  There are some instances when people will pay more if the property is worth it to them.
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November 04 2012
critical detail is whether or not your contract has any language about being able to cancel the contract if the home does not appraise.

there may be additional details unique to California- so if no CA people answer you want ot follow up with someone there. (WHERE"S VINCE??? maybe he will see this as he is both an agent and an appraiser).

It is possible that they can hold you to the price IF no language exists in the contract that gives you the option to withdraw or if no language exists that requires the home to appraise.

there is a big difference between them not agreeing to renegotiate and not agreeing to release  you from a contract and the contract not being voidable for this issue.

Here In Oklahoma there is standard language in contracts that protects the buyer if the appraisal is low.  but we also see times where everyone believes that appraisal is just bad and another is ordered to dispute it (done when the buyer insists it's good and wants it at that price and just wants to argue with the lender so they can get the loan because all parites believe it really is worth purchase price).

make sure your contract affords you this requirement.

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November 03 2012
I recently completed a personal purchase on a Wells Fargo REO. I bid significantly more than the asking price. (But honestly not more than the property was worth to me). They had me sign an addendum saying that they would NOT renegotiate if the appraisal was less. 

It was less, and they refused to even discuss reducing the price (although the square footage was 100 ft less). But they did agree to refund my earnest money. We elected to move forward with the purchase, as I had also asked for 3% in closing cost, which more than compensated.

I think it is difficult for them keep earnest money in this situation. If your contract is written with a financing contingency and you simply can't pay out of pocket, the lender won't loan. 

I see both sides of this issue. On the one side, some bidders offer more than a property is worth just to get the contract. They go in believing the appraisal will be less and the bank will reduce the price on the back side. On the other hand, the bidder may be making an honest offer, and they are now being asked to sign a contract saying they will pay the difference out of pocket....and there is simply NO way to know what that difference may be. 

I feel that if they banks are going to stick their feet in the sand like this, then they need to have an FHA appraisal done on the property at the time of listing it, like properties that are sold through hudhomestore.com. 

Bottom line, it is hard to keep earnest money if the financing won't go through.
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November 03 2012
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A realtor who has been working with REO's for 5 years with the same bank told me that she has seen the bank hold the buyer to the offer price. 

At that point, the buyer would have to come out of pocket to make up the difference between the agreed upon appraisal and the offer price. If not then I'd lose the $ I put down for escrow.

I'm afraid of offering too much or the appraisal coming in to low. I don't want to have to put any more out of pocket than the down payment and closing costs. 

Any suggestions? Thank you! 
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November 03 2012
You would be obligated to the contractually agreed upon price unless one of two things happen.

Your bank won't lend you the money because the appraised value is below the contract value.

Or you negotiate a lower price with the seller (the bank). They may be willing to renegotiate the price to reflect the appraisal. Or they may require a 2nd appraisal to ascertain true value and adjust the price accordingly.
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November 03 2012
 
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