[quote=flu][quote=CA renter][quote=flu][quote=CA renter]If the appraisal came in low, use it to your advantage. Tell the seller than you can only pay the appraised amount. See if they reduce it all the way, or part of the way.
Good luck![/quote]
In this market? ha ha ha ha. If I were the seller, I’d say… See ya, next buyer.[/quote]
Sure, if there are cash buyers or buyers with extra cash over the 20% who are willing to pay an inflated price. I’d still take my chances as a buyer to negotiate. IIRC, if they show the appraisal to the listing agent/seller, it’s supposed to be included as part of the disclosure package. SDR, please correct me if I’m wrong on this.[/quote]
With the way lending requirements are these days, provided the person can qualify for the loan, I’d take the one(s) that gave me the higher offer, who had more than 20% down, but I wouldn’t require them to pay 100% cash, especially if the house is over $1million. I think it would depend on how much activity there is in that area. If there has been many sales nearby of comparable, then the that might be a red flag. But if the sales history in that area has been spotty, and especially if the appraiser isn’t from san diego, that might have a lot to do with it. I don’t follow what you said about “the 20% who are willing to pay an inflated price”. I’m not sure where you got 20% from. And as far as inflated price. One can determine if the price is inflated if there is a reasonable comparable.[/quote]
Whoops! Sorry about the totally horrible syntax there, as I was posting in a hurry.
What I meant was that the seller could sell to all-cash buyers if the house is in an area that attracts these types of buyers, or simply to someone who is willing to fork over additional money that exceeds the 20% down payment, like Essbee did. A mortgage company won’t usually increase the amount they’re willing to lend beyond 80% of the appraised value if it’s a conforming loan, so the buyer has to increase the amount of cash they’re willing to contribute above the 20% down payment.
In our case, the appraisal came in low; and even though we were all-cash buyers, we still insisted on purchasing at the lower, appraised price. We offered to pay for the seller to hire their own appraiser to see if they could get a different number, but they weren’t able to find any comps that would justify their higher list price. In the end, we paid the appraised price plus $10K toward our agent’s commission. We also let them forgo a lot of the repairs that they would have had to do for buyers who were using a mortgage (required termite work for mortgaged properties) which saved them thousands of dollars. The appraisal came in $50K below the list price.
The appraisal also noted that the market was declining, so even though they wanted to test the market some more, they knew that they had a solid buyer who could close in a matter of days, so we got the house.
