The Real Estate Encyclopedia
What If My Appraisal Comes In Below The Purchase Price?
Category - Home Buying Questions - Search & Offer FAQ's

To protect the buyer when writing an offer, the buyer’s agent should always include a contingency stating 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. 

 

Failure to include the proper contingency in the agreement could make you responsible for buying the property at the higher purchase price and force you to come up with a higher down payment.  The pre-printed clause in your purchase contract, making the offer contingent upon loan approval offers some protection, since it is unlikely that the lender will approve the loan if the appraisal does not support the purchase price.

 

If the seller is not willing to take less for the home, the buyer is best advised to terminate the contract. 

 
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Home Buying Questions - Search & Offer FAQ's
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