My loan fell through because the property was assesed for less than what I am paying. How can I salvage this?

Question

Help! The underwriter for my home loan would not accept the appraisal done on the property. He says the price should be much lower then the seller is willing to go. Has this happened to anyone? Why is this so important? I thought it was normal to pay more for a home than it is appraised for.

Answer 1

welcome to the burst bubble.home prices are falling and many homeowners owe more than the house is worth.It's been in all the headlines for the last couple months

Answer 2

Wait a second, if the underwriter is saying that the appraiser that the bank he works for hired has done a poor job of appraising the property, then he should hire another appraiser. But make sure that the underwriter pays for the second appraisal.

If you hired the appraiser without consulting the lender, then you may have to hire a different appraiser (from the lenders approved list) to appraise the property. If it still appraises lower than the contracted sales price, you take the appraisal to the Seller and let him/her know that it appraised lower than their asking price twice now and that you will purchase the property at the appraised value, and nothing more. If they're not willing to come down, then walk away, because the Seller is trying to take advantage of you and the home is not what they're asking for it. It is common knowledge that if a home gets an honest appraisal, any appraisal should be at a similar amount.

An appraisal is to protect both yourself and the lender on the property. The bank won't lend money on a home for more than the appraised value because, if you default on the loan, they will lose money when the "repossess" the home.

You never pay more for a home than the appraised value - just like you wouldn't pay $30,000 for a car that has the MSRP (Manufacturer's Suggested Retail Price) of $25,000.

Best of luck!

PS - where's your Realtor in all of this - he/she should be giving you advice on this.

Answer 3

In most cases, the house WILL appraise at offered price or greater. However, I have encountered more than one situation in which the house did not appraise sufficiently. No, it is NOT normal to pay more for a house than the amount for which it appraises. The MOST you should pay is appraised value.

Your only option at this point is to either cough up the additional cash required to complete the purchase, or have your lender seek out different sources for money, using a different appraiser.

Good luck.

Answer 4

If you are using an Offer to Purchase contract through the National Association of Realtors, there may be a clause that says that if the house appraises at less than the offered price that you, the Buyer, can cancel the deal and get your money back or renegotiate. It's apparently overpriced. So have your Realtor point this out and renegotiate the sales price to match the appraisal.

Or, pay the difference out of your pocket.

Answer 5

In some communities it is normal to pay more than the assessed value (which is used for tax calculations.) Here's why there's a problem. Let say the house you are buying is $150,000 and the appraisal says the house is worth only $120,000. If you are loaned the money for the house and default, the best that the lender can recoup for the house is $120,000, and you've borrowed $150,000. They are almost surely out $30,000 on this deal. If you were lending money to someone, do you think that would be a good idea?

Answer 6

Lenders are very concerned about the falling values of homes, it is never normal for a lender to loan more than a property is worth nor is it normal to pay more than it is appraised for; those days are over. Check my website to see if you are in a state I do business in and if you are interested, I may be able to assist you.

Answer 7

I would recommend going with another lender. It appears that the property appraised, but the underwriter has a problem. Use another lender.

Answer 8

why would you want to pay more than it's worth?