|
The property did not appraise at the full contract price, what now?
|
|
|
This is a setback but does by no means spell the end to a final positive conclusion of the transaction. First of all a valuation below the offered purchase price should make you think again about the purchase price. If your real estate agent properly performed a market analysis you should have arrived at a fair market price of the property you are intending to buy. Did the market recently change and the negotiated purchase price is no longer supported by recent lower transactions?
If you come to the conclusion that the property is worth every penny of your offered price you can ask for another appraisal. This might or might not be acceptable to the lender. If this approach fails you can switch lenders and have a different appraisal ordered that might come to a different valuation conclusion.
If your finances allow it you can still get financing on a percentage of the appraised price and make up the difference with your own funds. Let say that your mortgage will be 80% of the appraised value or the purchase price whichever is lower. Let say the purchase price is $1.2M but the appraisal come in at $1.0M.
The loan amount would then be 80% of $1.0M so $800k. To fully find the deal you would have to come up with $400k of your own funds. If the property had appraised at $1.2M the 80% mortgage would have been $960k and you would have only had to come up with $240k of your own funds. |
|
|
