| Posted By |
Message |
| Pages: [1] 2 |
greenfreak
.
Member since 9/06 11483 total posts
Name:
greenfreak
|
Negotiating price if appraisal comes in LESS than selling price?
Our appraisal is happening right now, and I was wondering... Have you ever heard of an appraisal coming in less than the selling price?
Our mortgage broker said if that happens, we could either negotiate for a lesser selling price or the seller could order another appraisal.
I don't think that is going to happen, I was just curious. 
|
Posted 9/20/07 1:34 PM  |
| |
|
Prudential Douglas Elliman Real Estate
Long Island's Largest Bridal Resource | Long Island Weddings |
VickiC
Rocking the party
Member since 5/05 4937 total posts
Name:
Vicki
|
Re: Negotiating price if appraisal comes in LESS than selling price?
The bank won't give you a mortgage for the selling price if the apprasial comes in under it I believe. So no matter what the seller would either have to come down in price or pay for another appraisal.
Message edited 9/20/2007 1:38:39 PM.
|
| Posted 9/20/07 1:38 PM |
| |
|
MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by VickiC
The bank won't give you a mortgage for the selling price if the apprasial comes in under it I believe. So no matter what the seller would either have to come down in price or pay for another appraisal.
Im not sure the bank would accept an appraisal ordered by the seller. Either way, if the first appraisal comes in too low, id negotiate it lower or walk away.
|
| Posted 9/20/07 1:41 PM |
| |
|
GoldenRod
10 years on LIF!
Member since 11/06 26792 total posts
Name:
Shawn
|
Re: Negotiating price if appraisal comes in LESS than selling price?
The selling price is what the owners WANT. The appraisal is what the house is WORTH. The two numbers don't always line up...  
|
| Posted 9/20/07 1:49 PM |
| |
|
JandJ1224
Member since 6/06 5911 total posts
Name:
Jannette
|
Re: Negotiating price if appraisal comes in LESS than selling price?
I believe that you would either need to renegotiate price, put more down to cover the difference, or walk away...
|
| Posted 9/20/07 1:56 PM |
| |
|
Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by VickiC
The bank won't give you a mortgage for the selling price if the apprasial comes in under it I believe. So no matter what the seller would either have to come down in price or pay for another appraisal.
Unfortunately, this is not necessarily true -- and this could get the buyer in trouble if the appraisal is low.
If the appraisal is low and the bank will lend anyway, then the buyer cannot get out of the contract under the financing clauses. We discussed this with our lawyer before we signed the contract and she added a line to our contract that our financing had to be for the purchase price "at least at a 90% loan to value ratio." This gave us an out if our appraisal came in low.
Let's assume buyer has exceptional credit and is putting 10% down on a 500,000 purchase price. Let's further assume the buyer makes good money and the home is being purchased for a price far less than she can comfortably afford. If the appraisal comes in at $490,000, the bank can still opt to lend to the buyers for $500,000 because (1) there is still equity and (2) the buyers are a low credit risk, so $10,000 less in equity isn't a huge enough deal to the bank to walk away or something. At this point, the buyer still has financing and can't walk away, UNLESS the contract provides that the appraised value must be at a certain level.
That said, the above scenario is VERY rare. Usually, the appraised value is close to or higher than the purchase price. Mortgage lenders are very tight about lending now which also means they aren't likely to lend to you if your appraisal is too low. I doubt the OP has anything to worry about. Further, if it WERE to come in lower, I would ask the seller to lower the purchase price first (and not tell them anything about your bank / financing) to at least the appraised value. The bank may also order another appraisal (or the seller may get another appraisal). The bank can also walk away from the deal and then you can get out of the contract b/c you don't have financing (providing your contract is expressly contingent upon you obtaining financing)
For those not yet in contract, try to get a clause in there that states that your financing must be for the purchase price amount and a particular loan to value ratio. THis protect you from potentially having to pay more than the home is worth in the event the bank is willing to lend to you anyway.
|
| Posted 9/20/07 2:06 PM |
| |
|
leese
Sarge!
Member since 5/05 1965 total posts
Name:
Leese
|
Re: Negotiating price if appraisal comes in LESS than selling price?
It happened to us with our condo. It was a different market and we made the decision to pay the additional $5,000 that we needed to.
However, I would never recommend that to someone unless this was their dream house and they didn't want to lose it.
And, I wouldn't recommend it in this market.
|
| Posted 9/20/07 2:18 PM |
| |
|
Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by leese
It happened to us with our condo. It was a different market and we made the decision to pay the additional $5,000 that we needed to.
However, I would never recommend that to someone unless this was their dream house and they didn't want to lose it.
And, I wouldn't recommend it in this market.
I'm not saying I would recommend it. I'm saying you would have no choice but to purchase or default on the contract (and hence lose your earnest money deposit) unles your contract specified that you had to have financing at a particular loan-to-value ratio. Then you're stuck. Often, buying for the higher price will be preferable to losing your earnest money deposit that you put down at closing...
I'd definitely try to work something out with the sellers if you find yourself in that situation before telling them your bank will still lend the money -- but you could be in a situation where you have no choice if there isn't anything in your contract stating that the house must appraise for a specific value. (Most contacts do NOT have this provision)
|
| Posted 9/20/07 2:28 PM |
| |
|
MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Unfortunately, this is not necessarily true -- and this could get the buyer in trouble if the appraisal is low.
If the appraisal is low and the bank will lend anyway, then the buyer cannot get out of the contract under the financing clauses. We discussed this with our lawyer before we signed the contract and she added a line to our contract that our financing had to be for the purchase price "at least at a 90% loan to value ratio." This gave us an out if our appraisal came in low.
Let's assume buyer has exceptional credit and is putting 10% down on a 500,000 purchase price. Let's further assume the buyer makes good money and the home is being purchased for a price far less than she can comfortably afford. If the appraisal comes in at $490,000, the bank can still opt to lend to the buyers for $500,000 because (1) there is still equity and (2) the buyers are a low credit risk, so $10,000 less in equity isn't a huge enough deal to the bank to walk away or something. At this point, the buyer still has financing and can't walk away, UNLESS the contract provides that the appraised value must be at a certain level.
are you 100% sure this is true? The point of an appraisal is to get the value of the property. If the appraisal comes in at $490k, how is there equity if they are lending $500k? I work in commercial banking - we lend against the purchase price or appraised value, whichever is LOWER. that is the whole point of the appraisal.
Message edited 9/20/2007 2:30:02 PM.
|
| Posted 9/20/07 2:29 PM |
| |
|
SweetTooth
I'm a tired mommy!
Member since 12/05 20105 total posts
Name:
Lauren
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by Meaghan729
Unfortunately, this is not necessarily true -- and this could get the buyer in trouble if the appraisal is low.
If the appraisal is low and the bank will lend anyway, then the buyer cannot get out of the contract under the financing clauses. We discussed this with our lawyer before we signed the contract and she added a line to our contract that our financing had to be for the purchase price "at least at a 90% loan to value ratio." This gave us an out if our appraisal came in low.
Let's assume buyer has exceptional credit and is putting 10% down on a 500,000 purchase price. Let's further assume the buyer makes good money and the home is being purchased for a price far less than she can comfortably afford. If the appraisal comes in at $490,000, the bank can still opt to lend to the buyers for $500,000 because (1) there is still equity and (2) the buyers are a low credit risk, so $10,000 less in equity isn't a huge enough deal to the bank to walk away or something. At this point, the buyer still has financing and can't walk away, UNLESS the contract provides that the appraised value must be at a certain level.
are you 100% sure this is true? The point of an appraisal is to get the value of the property. If the appraisal comes in at $490k, how is there equity if they are lending $500k? I work in commercial banking - we lend against the purchase price or appraised value, whichever is LOWER. that is the whole point of the appraisal.
Using Kara's example; the bank is lending $450,000 - so even if the appraisal comes in is 490K, there is still 40K in equity.
|
| Posted 9/20/07 2:45 PM |
| |
|
MrsT
Enjoying wedded bliss.....
Member since 4/06 1323 total posts
Name:
Katrina
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by Kara
Unfortunately, this is not necessarily true -- and this could get the buyer in trouble if the appraisal is low.
If the appraisal is low and the bank will lend anyway, then the buyer cannot get out of the contract under the financing clauses. We discussed this with our lawyer before we signed the contract and she added a line to our contract that our financing had to be for the purchase price "at least at a 90% loan to value ratio." This gave us an out if our appraisal came in low.
Let's assume buyer has exceptional credit and is putting 10% down on a 500,000 purchase price. Let's further assume the buyer makes good money and the home is being purchased for a price far less than she can comfortably afford. If the appraisal comes in at $490,000, the bank can still opt to lend to the buyers for $500,000 because (1) there is still equity and (2) the buyers are a low credit risk, so $10,000 less in equity isn't a huge enough deal to the bank to walk away or something. At this point, the buyer still has financing and can't walk away, UNLESS the contract provides that the appraised value must be at a certain level.
That said, the above scenario is VERY rare. Usually, the appraised value is close to or higher than the purchase price. Mortgage lenders are very tight about lending now which also means they aren't likely to lend to you if your appraisal is too low. I doubt the OP has anything to worry about. Further, if it WERE to come in lower, I would ask the seller to lower the purchase price first (and not tell them anything about your bank / financing) to at least the appraised value. The bank may also order another appraisal (or the seller may get another appraisal). The bank can also walk away from the deal and then you can get out of the contract b/c you don't have financing (providing your contract is expressly contingent upon you obtaining financing)
For those not yet in contract, try to get a clause in there that states that your financing must be for the purchase price amount and a particular loan to value ratio. THis protect you from potentially having to pay more than the home is worth in the event the bank is willing to lend to you anyway.
Something similar happened to a friend. The appraisal came in lower and he and his wife opted to pay the difference of out pocket and finance the rest.
|
| Posted 9/20/07 2:45 PM |
| |
|
Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by SweetTooth
Posted by Meaghan729
Unfortunately, this is not necessarily true -- and this could get the buyer in trouble if the appraisal is low.
If the appraisal is low and the bank will lend anyway, then the buyer cannot get out of the contract under the financing clauses. We discussed this with our lawyer before we signed the contract and she added a line to our contract that our financing had to be for the purchase price "at least at a 90% loan to value ratio." This gave us an out if our appraisal came in low.
Let's assume buyer has exceptional credit and is putting 10% down on a 500,000 purchase price. Let's further assume the buyer makes good money and the home is being purchased for a price far less than she can comfortably afford. If the appraisal comes in at $490,000, the bank can still opt to lend to the buyers for $500,000 because (1) there is still equity and (2) the buyers are a low credit risk, so $10,000 less in equity isn't a huge enough deal to the bank to walk away or something. At this point, the buyer still has financing and can't walk away, UNLESS the contract provides that the appraised value must be at a certain level.
are you 100% sure this is true? The point of an appraisal is to get the value of the property. If the appraisal comes in at $490k, how is there equity if they are lending $500k? I work in commercial banking - we lend against the purchase price or appraised value, whichever is LOWER. that is the whole point of the appraisal.
Using Kara's example; the bank is lending $450,000 - so even if the appraisal comes in is 490K, there is still 40K in equity.
I'm 100% positive of this. NOT every bank will do this with EVERY mortgage, but it's POSSIBLE. The chances of it happening are slim, but definitely possible. The reason our (excellent) lawyer even brought it up was b/c we happened to be in a situation where we were buying well beneath our means and had excellent credit and a decent sized down payment. She wanted us to be prepared that we may still have to buy if the appraisal was below the asking price. She managed to put in a provision to state that our financing had to be for a particular loan to appraised value ratio -- this way, if we didn't get an appraisal that was equal to or greater than the sales price, we could get out of the contract and get our earnest money deposit back.
ETA - Your math isn't accounting for the downpayment, as MrsT pointed out. All the bank has to do is determine if you are worth the credit risk of lending to you with less equity / less of a downpayment NOT negative equity.
Message edited 9/20/2007 3:00:07 PM.
|
| Posted 9/20/07 2:59 PM |
| |
|
MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by Kara
Posted by SweetTooth
Posted by Meaghan729
Unfortunately, this is not necessarily true -- and this could get the buyer in trouble if the appraisal is low.
If the appraisal is low and the bank will lend anyway, then the buyer cannot get out of the contract under the financing clauses. We discussed this with our lawyer before we signed the contract and she added a line to our contract that our financing had to be for the purchase price "at least at a 90% loan to value ratio." This gave us an out if our appraisal came in low.
Let's assume buyer has exceptional credit and is putting 10% down on a 500,000 purchase price. Let's further assume the buyer makes good money and the home is being purchased for a price far less than she can comfortably afford. If the appraisal comes in at $490,000, the bank can still opt to lend to the buyers for $500,000 because (1) there is still equity and (2) the buyers are a low credit risk, so $10,000 less in equity isn't a huge enough deal to the bank to walk away or something. At this point, the buyer still has financing and can't walk away, UNLESS the contract provides that the appraised value must be at a certain level.
are you 100% sure this is true? The point of an appraisal is to get the value of the property. If the appraisal comes in at $490k, how is there equity if they are lending $500k? I work in commercial banking - we lend against the purchase price or appraised value, whichever is LOWER. that is the whole point of the appraisal.
Using Kara's example; the bank is lending $450,000 - so even if the appraisal comes in is 490K, there is still 40K in equity.
I'm 100% positive of this. NOT every bank will do this with EVERY mortgage, but it's POSSIBLE. The chances of it happening are slim, but definitely possible. The reason our (excellent) lawyer even brought it up was b/c we happened to be in a situation where we were buying well beneath our means and had excellent credit and a decent sized down payment. She wanted us to be prepared that we may still have to buy if the appraisal was below the asking price. She managed to put in a provision to state that our financing had to be for a particular loan to appraised value ratio -- this way, if we didn't get an appraisal that was equal to or greater than the sales price, we could get out of the contract and get our earnest money deposit back.
ETA - Your math isn't accounting for the downpayment, as MrsT pointed out. All the bank has to do is determine if you are worth the credit risk of lending to you with less equity / less of a downpayment NOT negative equity.
i misunderstood the scenario - but even if you figure with the DP, if the bank is saying they will lend 80% - they are using the lower of the sales or appraisal. the only choice for the buyer is to put more $$ down or to get alternate financing. the bank isnt going to say (espeically in todays market) that its ok, we still have some equity. you will be paying a higher interest rate or PMI.
my contract stated that the appraisal had to be equal to or greater than the purchase price. IMO its not any of the sellers business what my LTV is as long as I can obtain financing.
|
| Posted 9/20/07 3:13 PM |
| |
|
smdl
I love Gary too..on a plate!
Member since 5/06 32461 total posts
Name:
me
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by VickiC
The bank won't give you a mortgage for the selling price if the apprasial comes in under it I believe. So no matter what the seller would either have to come down in price or pay for another appraisal.
ITA. No lender will give you a mortgage for more than the appraisal.
ETA: examples: selling price: $400K appraised at $420K... You get a mortage for $400K you have already $20K in equity... Now if selling price is $400K but appraisal is at $380K. You have a mortgage for $380K.. YOU have to come up with the $20K yourself. You cannot get that $20K from the lender.
Message edited 9/20/2007 3:53:15 PM.
|
| Posted 9/20/07 3:49 PM |
| |
|
Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by smdl
Posted by VickiC
The bank won't give you a mortgage for the selling price if the apprasial comes in under it I believe. So no matter what the seller would either have to come down in price or pay for another appraisal.
ITA. No lender will give you a mortgage for more than the appraisal.
ETA: examples: selling price: $400K appraised at $420K... You get a mortage for $400K you have already $20K in equity... Now if selling price is $400K but appraisal is at $380K. You have a mortgage for $380K.. YOU have to come up with the $20K yourself. You cannot get that $20K from the lender.
You are incorrect. While MOST of the time, with MOST buyers and MOST homes the bank will not lend if the appraisal is lower than than the sale price, they absolutely CAN opt to still lend and sometimes DO without requiring you to pay any more cash out of pocket for the downpayment. This is why you need to be careful with the wording of the contract.
I'm not pulling this out of thin air. It was something my attorney brought up when we were going over the contract AND something that happened to my Dh's dear friend.
If you read my post carefully, I stated that it is RARE, but it still CAN happen. I didn't say it WOULD happen in all - or even most - or even many cases. It still can happen and if you are at risk for this (good credit, substantial downpayment, and buying well beneath your means), it would be a good idea to work a LTV clause into the financing clause of your contract.
Just b/c it's rare doesn't mean it doesn't ever happen.
Message edited 9/20/2007 4:00:37 PM.
|
| Posted 9/20/07 3:59 PM |
| |
|
Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
|
Re: Negotiating price if appraisal comes in LESS than selling price?
PS - Greenfreak, don't worry!! I'm sure your appraisal will be higher than the sale price -- and if it's not, it's entirely unlikely the bank wouldn't require a lower sale price or another appraisal. 
|
| Posted 9/20/07 4:06 PM |
| |
|
MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by Kara
Posted by smdl
Posted by VickiC
The bank won't give you a mortgage for the selling price if the apprasial comes in under it I believe. So no matter what the seller would either have to come down in price or pay for another appraisal.
ITA. No lender will give you a mortgage for more than the appraisal.
ETA: examples: selling price: $400K appraised at $420K... You get a mortage for $400K you have already $20K in equity... Now if selling price is $400K but appraisal is at $380K. You have a mortgage for $380K.. YOU have to come up with the $20K yourself. You cannot get that $20K from the lender.
You are incorrect. While MOST of the time, with MOST buyers and MOST homes the bank will not lend if the appraisal is lower than than the sale price, they absolutely CAN opt to still lend and sometimes DO without requiring you to pay any more cash out of pocket for the downpayment. This is why you need to be careful with the wording of the contract.
I'm not pulling this out of thin air. It was something my attorney brought up when we were going over the contract AND something that happened to my Dh's dear friend.
If you read my post carefully, I stated that it is RARE, but it still CAN happen. I didn't say it WOULD happen in all - or even most - or even many cases. It still can happen and if you are at risk for this (good credit, substantial downpayment, and buying well beneath your means), it would be a good idea to work a LTV clause into the financing clause of your contract.
Just b/c it's rare doesn't mean it doesn't ever happen.
in the above posters case, that means the bank would be financing more than 100%. so we are talking about two different scenarios. you are talking about having a substantial down payment- we are not.
and like i said already- we had a clause that was boilerplate (not written in by my attorney, it was in teh standard doc) that the house had to appraise for the purchase price. there woudl be no need for an LTV clause - because again i feel its no business of the sellers to know much im financing. as long as I have a preapproval, thats all they need to know.
|
| Posted 9/20/07 4:08 PM |
| |
|
Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by Meaghan729
Posted by Kara
Posted by smdl
Posted by VickiC
The bank won't give you a mortgage for the selling price if the apprasial comes in under it I believe. So no matter what the seller would either have to come down in price or pay for another appraisal.
ITA. No lender will give you a mortgage for more than the appraisal.
ETA: examples: selling price: $400K appraised at $420K... You get a mortage for $400K you have already $20K in equity... Now if selling price is $400K but appraisal is at $380K. You have a mortgage for $380K.. YOU have to come up with the $20K yourself. You cannot get that $20K from the lender.
You are incorrect. While MOST of the time, with MOST buyers and MOST homes the bank will not lend if the appraisal is lower than than the sale price, they absolutely CAN opt to still lend and sometimes DO without requiring you to pay any more cash out of pocket for the downpayment. This is why you need to be careful with the wording of the contract.
I'm not pulling this out of thin air. It was something my attorney brought up when we were going over the contract AND something that happened to my Dh's dear friend.
If you read my post carefully, I stated that it is RARE, but it still CAN happen. I didn't say it WOULD happen in all - or even most - or even many cases. It still can happen and if you are at risk for this (good credit, substantial downpayment, and buying well beneath your means), it would be a good idea to work a LTV clause into the financing clause of your contract.
Just b/c it's rare doesn't mean it doesn't ever happen.
in the above posters case, that means the bank would be financing more than 100%. so we are talking about two different scenarios. you are talking about having a substantial down payment- we are not.
and like i said already- we had a clause that was boilerplate (not written in by my attorney, it was in teh standard doc) that the house had to appraise for the purchase price. there woudl be no need for an LTV clause - because again i feel its no business of the sellers to know much im financing. as long as I have a preapproval, thats all they need to know.
Yes, you're right, they aren't going to lend with negative equity. (The above poster case I guess assumes no downpayment... I see that now. Sorry!)
Not all contracts have anything stating that the house must appraise for the sale value. (Yours did, but not all of them actually do. It's just another thing to think about when negotiating the contract.)
And, to some extent, isn't it the seller's business how much your financing? The amount of your downpayment should have been part of your offer and written into the contract... not that you have to divulge details of what happens... but if it came down to a situation where the lender was willing to lend, the seller wasn't budging on the price, and the appraisal was lower, you can't lie to the seller about the financing to get out of the contract.
I'm not trying to cause major drama here. It's just a PSA to make sure that your contract says more than just "obtain financing w/ X downpayment." That's all!
It's rare that it happens... VERY VERY VERY RARE, but us lawyers are around to worry about the minutia. It's our very anal job. 
Message edited 9/20/2007 4:21:19 PM.
|
| Posted 9/20/07 4:15 PM |
| |
|
MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by Kara
Posted by Meaghan729
Posted by Kara
Posted by smdl
Posted by VickiC
The bank won't give you a mortgage for the selling price if the apprasial comes in under it I believe. So no matter what the seller would either have to come down in price or pay for another appraisal.
ITA. No lender will give you a mortgage for more than the appraisal.
ETA: examples: selling price: $400K appraised at $420K... You get a mortage for $400K you have already $20K in equity... Now if selling price is $400K but appraisal is at $380K. You have a mortgage for $380K.. YOU have to come up with the $20K yourself. You cannot get that $20K from the lender.
You are incorrect. While MOST of the time, with MOST buyers and MOST homes the bank will not lend if the appraisal is lower than than the sale price, they absolutely CAN opt to still lend and sometimes DO without requiring you to pay any more cash out of pocket for the downpayment. This is why you need to be careful with the wording of the contract.
I'm not pulling this out of thin air. It was something my attorney brought up when we were going over the contract AND something that happened to my Dh's dear friend.
If you read my post carefully, I stated that it is RARE, but it still CAN happen. I didn't say it WOULD happen in all - or even most - or even many cases. It still can happen and if you are at risk for this (good credit, substantial downpayment, and buying well beneath your means), it would be a good idea to work a LTV clause into the financing clause of your contract.
Just b/c it's rare doesn't mean it doesn't ever happen.
in the above posters case, that means the bank would be financing more than 100%. so we are talking about two different scenarios. you are talking about having a substantial down payment- we are not.
and like i said already- we had a clause that was boilerplate (not written in by my attorney, it was in teh standard doc) that the house had to appraise for the purchase price. there woudl be no need for an LTV clause - because again i feel its no business of the sellers to know much im financing. as long as I have a preapproval, thats all they need to know.
Yes, you're right, they aren't going to lend with negative equity. (The above poster case I guess assumes no downpayment... I see that now. Sorry!)
Not all contracts have anything stating that the house must appraise for the sale value. (Yours did, but not all of them actually do. It's just another thing to think about when negotiating the contract.)
And, to some extent, it is the seller's business how much your financing. The amount of your downpayment should have been part of your offer and written into the contract. My point was that you don't have to tell the seller that the bank is still willing to lend before asking them to lower the price. If, however, the bank IS still willing to lend, the sellers won't lower the price, and there is nothing else under the contract releasing you from the contract, then you can't hid the fact that your bank isn't willing to lend from the sellers. You can't lie about that to get out of the contract.
I'm not trying to cause major drama here. It's just a PSA to make sure that your contract says more than just "obtain financing w/ X downpayment." That's all!
It's rare that it happens... but us lawyers are around to worry about the minutea. It's our very anal job.
ugh you lawyers always starting trouble 
no i see your point - and now im going to want to go home and read my contract- thanks alot now im trying to remember what it said.
unfortunately, these days people are going to have to worry about appraisal values since the market isnt so hot.
and to the OP = only worry about it when it happens! i woudl also question your broker about the seller getting their own appraisal - most banks wont accept an appraisal ordered by a buyer or seller.
|
| Posted 9/20/07 4:20 PM |
| |
|
smdl
I love Gary too..on a plate!
Member since 5/06 32461 total posts
Name:
me
|
Re: Negotiating price if appraisal comes in LESS than selling price?
OK... OUR lawyer told us that NO lender would lend us more than the appraisal.
|
| Posted 9/20/07 4:22 PM |
| |
|
Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Sorry to cause trouble. I didn't mean to start any drama.  Bad lawyer! Bad!
Don't worry. With the mortgage industry crisis going on now, no mortgage company is going to lend on a low appraisal.
And you're right - it is only recently that we even have to worry about appraised values. They're really cracking down on inflated appraisals just so they can make the loan -- However, it's also a buyer's market and I'm confident greenfreak made a good offer, which is below the appraised value.
GOOD LUCK!
(going to spend 10 minutes in the corner thinking about the drama I caused...)
|
| Posted 9/20/07 4:23 PM |
| |
|
MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by Kara
Sorry to cause trouble. I didn't mean to start any drama. Bad lawyer! Bad!
Don't worry. With the mortgage industry crisis going on now, no mortgage company is going to lend on a low appraisal.
And you're right - it is only recently that we even have to worry about appraised values. They're really cracking down on inflated appraisals just so they can make the loan -- However, it's also a buyer's market and I'm confident greenfreak made a good offer, which is below the appraised value.
GOOD LUCK!
(going to spend 10 minutes in the corner thinking about the drama I caused...)
oh stop, no drama!! more like an educational debate 
|
| Posted 9/20/07 4:33 PM |
| |
|
smdl
I love Gary too..on a plate!
Member since 5/06 32461 total posts
Name:
me
|
Re: Negotiating price if appraisal comes in LESS than selling price?
Posted by Kara
Sorry to cause trouble. I didn't mean to start any drama. Bad lawyer! Bad!
Don't worry. With the mortgage industry crisis going on now, no mortgage company is going to lend on a low appraisal.
And you're right - it is only recently that we even have to worry about appraised values. They're really cracking down on inflated appraisals just so they can make the loan -- However, it's also a buyer's market and I'm confident greenfreak made a good offer, which is below the appraised value.
GOOD LUCK!
(going to spend 10 minutes in the corner thinking about the drama I caused...)
No drama! I always trusted my lawyers....
|
| Posted 9/20/07 5:24 PM |
| |
|
greenfreak
.
Member since 9/06 11483 total posts
Name:
greenfreak
|
Re: Negotiating price if appraisal comes in LESS than selling price?
You Home Board chicks ROCK.
Seriously, you do. I know it sounds so corny, but I'm proud that this thread didn't go south at all, even with the differing opinions and information.
I learned a lot! More than I thought, so thanks everyone.
We are confident in the appraisal and we do have healthy salaries, healthy credit scores and such so I'm not worried.
It was more of something I was curious about and when I did a search, I didn't come up with anyone else who had asked.
Thanks again!
|
| Posted 9/20/07 6:45 PM |
| |
|
sunnyplus3
:)
Member since 11/05 8749 total posts
Name:
|
Re: Negotiating price if appraisal comes in LESS than selling price?
it has already been beat to death, but we had an investment property in Florida that appraised for 10k less than our agreed selling price. We opted to negotiate the price down to help the buyers, they did NOT have good credit & they were doing 100% financing(things are different in Florida & this was just before the height of the market there). We didn't want to hold the property so we lowered the price. We closed a few days later & everyone was happy.
I'm sure you'll be fine, appraisers are still using overinflated comps.
|
| Posted 9/20/07 9:13 PM |
| |
|
| Pages: [1] 2 |
