+1 vote
asked Dec 18, 2017 in Conventional Loans by anonymous

2 Answers

+1 vote
Hi, and thank you for writing. Not sure if you are the seller or buyer here, so I'll go over both. If the sales contract says that the buyer can kill the deal if the appraisal is low, he or she can do that. If the buyer is financing with a government-backed mortgage, that clause becomes part of your agreement by law. The seller cannot force the buyer to go through with it. In addition, if the buyer has a conventional (non-government) loan, chances are good that the lender's approval depends on the property meeting its guidelines, including an appraised value. So a low appraisal is also an easy out for the buyer. The buyer can, if he or she chooses, make a higher down payment and close the deal. Few will do this unless they believe the appraisal was badly done or want the house very badly, and also have the means to pay more. In most cases, the parties re-negotiate the sales price or kill the deal.
answered Dec 18, 2017 by GinaPogol (47,650 points)
0 votes
Gina answered it perfectly.  FHA LOANS has the FHA AMENDATORY CLAUSE that is signed by all buyers and sellers and both realtors. This FHA CLAUSE is the buyers right to back out of the deal if appraisal doesn't appraise. In most cases on low appraisal, sellers lower the sales price.

Gustan Cho NMLS 873293
Branch Manager
USA MORTGAGE
answered Feb 6, 2018 by GustanCho (106,540 points)

Welcome to The Mortgage Reports Q&A Forum. Have your questions answered by experienced mortgage and real estate professionals.

Related questions

515 questions
662 answers
883 users