What to do When Your Appraisal Doesn’t Match Your Purchase Price
You’ve been approved for a Florida home loan. You’ve even found the house of your dreams. Now, you or your Florida mortgage broker have hired an appraiser to price that piece of property.
There’s just one problem: the home has been appraised for less than the purchase price; now the transaction can is in jeopardy. Be aware, however, that a low appraisal won’t necessarily stand in the way of the lender granting the loan … as long the borrower is making a large cash down payment.
Inside this Florida mortgage conundrum
For example, let’s say you agree to pay $1 million for a property - and you have $300,000 for a down payment. The appraiser puts a $950,000 value on the property, which is less than you’ve agreed to pay. You’re a well-qualified buyer, however, so the lender is willing to give you a Florida mortgage loan for 80 percent of the appraised value ($760,000, in this case).
With a $300,000 cash down payment, you only need a $700,000 mortgage. Therefore, the sale can proceed, unless you have a problem buying a property that appraised for less than you agreed to pay.
Of course, buyers would prefer to have the property they’re buying appraised for the purchase price. But in some cases a house fits the buyers’ needs so perfectly that a low appraisal is irrelevant to them as long as they have the cash to close the sale.
Here’s where a problem can arise …
What if a borrower doesn’t have the additional cash to put down to make up the difference between the appraised value and the purchase price? This often takes place when buyers are making a low cash down payment or are putting no cash down at all, such is the case with a no-money-down Florida mortgage.
What can you do in this situation? One possibility is to ask for a second appraisal. Make sure, of course, you insist on an appraiser who is experienced and knowledgeable in the area where the property is located.
Another option is to ask the sellers to renegotiate the purchase price. Although no seller wants to accept less than the negotiated price, this option may work if the seller’s prospects of getting a higher price are slim.
You may be able to ask for less, in this case, on your Florida home loan, while also agreeing on a lower offer. It may be the best thing to ever happen to your house buying process!
