Sometimes appraisals come in low. As buyer or seller – you need to know your options! You can either…
1. Pay a portion (that the seller agrees to) or the the full difference of the gap between the appraised value and current sales price.
2. Ask the seller to lower the sales price to appraised value.
3. No agreement is made – seller doesn’t budge on price and you as the buyer don’t want to pay the difference. In this situation you can legally walk away from the deal and retain your earnest money. (As long as you are within the specified time frame in your Appraisal Contingency).
FHA and VA loans have what is called an Amendatory Clause which allows the buyer to back out of a real estate purchase transaction in the event the value comes in less than the purchase price AT ANY TIME PRIOR TO CLOSING. Conventional loans have a specified time frame for you to receive your appraisal back by – typically 15-21 days once you are under contract in this market. This is one of the reasons why Conventional loans are more favorable to sellers!
