Profile picture for user3517733

im a buyer. if apprasial come out lower than a price that i offer. can i back out w/my deposit check

  • October 02 2013 - US
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Answers (7)

You do not have to buy a home which does not appraise at the sale price.

That said, I am assuming you have a Realtor and used a standard purchase agreement supplied by that Realtor. 

There are options you can consider like having the seller reduce the price to the appraised value.  If  you added seller assist on top of the offer you made then that may not be an option.

If you are relying on financing to purchase the home the bank will not loan more than appraised value.

Good Luck and let us know if you have any other questions.
  • October 03 2013
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Here are your choices:
1-You can file an appeal with new comps if there are any. 
2-Pay difference in Cash. 
3-You can walk out of the deal. 
4-You can renegotiate with sellers, to reduce the price to the appraised value. 
It sounds that you want to choose #3; you should be able to have your Realtor or title company, to draw a cancellation of contract based on the appraisal facts and get your earnest money back.
  • October 03 2013
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Profile picture for Tesa Noonan
You would need to refer to your contract and any "Appraisal Contingency" or" Financing Contingency" that may be included.
Each state (and each contract) is different.

Good luck,

Tesa Noonan, REALTOR
  • October 03 2013
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According to your contract if you had a finance contingency (here in Florida about 30 days from execution of contract) and the home does not appraise, then you could have grounds to have a lender give you a loan rejection letter.  Normally if the appraisal comes in low, your agent can try to renegotiate the contract and get the seller to come down, or negotiate meeting in the middle.  The loan amount would be less, and you coming up with part of the difference would bring down your principal even more. 

In regard to getting your escrow deposit, that comes with a signed release and cancellation of contract asking for the money.  This is drafted by your representative agent/lawyer and given to the seller to release. 

 
  • October 02 2013
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Sure if your appraisal comes in lower than the listing price and your contract is contingent on financing you can walk away with your earnest money. There are other routes you can take if you truly want the home like putting down the difference or asking the seller to reduce the price...

Good Luck!
Brian 
  • October 02 2013
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Profile picture for Chris Boyles
Hello,

There are a couple of factors that come into play when the appraisal comes in lower than the sales price.  On paragraph four of the 1 to 4 family contract, it states that it has to meet lender requirements, which includes the home appraising for the sales price cause that is what the lender is basing their numbers off of for the loan.  The common practice in this situation if there is not a huge difference, more than $10,000 swing, is to split the difference with the sellers.  This would mean that you will have to bring the difference of the new negotiated sales price and the appraisal to the closing table.  Example, if you have a house at $150,000 sales price, it appraises for $145,000.  Common practice is to drop the sales price to $147,500, and the buyer would bring an additional $2500 to the closing table to make up the difference.  If you think that you are over paying for the home you can back out of the contract and get your earnest money back if you cannot come to common ground with the sellers.  You will loose your option money, inspection money, and the appraisal fee. 
Hope this helps
  • October 02 2013
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Profile picture for HighDesertAgent
If you're obtaining financing (or trying to obtain) then the lender will not lend ABOVE the appraised value.  You can come in with the extra cash or ask that the sales price be lowered or walk away.  You should be able to retain your earnest money.
  • October 02 2013
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