What if the appraisal comes back too low?
It seems to be happening a lot over the past couple years in the Denver Metro Area. Real estate agents are doing CMA’s (comparative market analysis) from the Buyer’s point of view and from the Seller’s point of view when pricing the property and when making offers. So what happens when the Buyer and Seller have agreed to a price and everyone thinks the appraisal will be fine but to everyone’s surprise the Appraiser told the bank the house wasn’t worth what everyone has agree to?
Even though the buyer is willing to pay the price, if they are getting a loan and the bank doesn’t think it is worth what the buyer wants to pay, the buyer cannot pay the price they agreed to even if they are bringing money to the table. It would be considered loan fraud if the buyer and seller had an outside agreement, of any terms not disclosed to the bank through the HUD or in the contract.
So, what are the options?
- The Seller and Buyer can contest the appraisal and have another one done or have someone take a second look at it. This could delay the closing so everyone just needs to be aware and be in agreement, not knowing what the outcome will be. Just because you contested it, it may not come back any better.
- The Seller can drop their price so the Buyer can still purchase at the appraised price.
- As long as you are within your contract dates, the Buyer can back out of the Colorado Buy Sell Contract and get their earnest money back.
If you have interest in selling or purchasing a home, please give me a call, or email me with you contact information so I can call you. 303-995-3180 or email@example.com.