The Real Estate Encyclopedia
What Happens If The Buyer’s Appraisal Comes In Below The Agreed To Purchase Price?
Category - Home Selling Questions - Selling Legal & Closing FAQ's

Typically, the buyer’s agent includes a contingency requiring that the property “appraise for a value equal or greater than the purchase price”.  If the appraisal does not support the purchase price, the buyer and seller resume negotiations, since the lender will not approve a loan for a property, which does not appraise. The fact that the lender requires an appraisal is an indication that the appraised value is one of the driving factors for loan approval. 

 

If the buyer fails to include the appraisal contingency, he or she could be required to purchase the home at the agreed to purchase price.  On the other hand, the contingency contained in all pre-printed home purchase contracts, regarding the buyer’s ability to obtain the necessary funds to complete the transaction, protects the buyer if the lender does not approve the loan based on the appraisal. 

 

If the appraisal comes in below the agreed purchase price, the seller has the option to accept the appraised value of the home as the purchase price. If the seller is not willing to take less for the home, the buyer has the option to terminate the contract.   

 
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Home Selling Questions - Selling Legal & Closing FAQ's
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