(TNS)—Q: After a long search, we finally found a home. We outbid the other interested parties and are under contract to close later this month. But our lender just told us that the house did not appraise for the purchase price. What can we do?
A: When you take out a mortgage, your lender will hire a licensed real estate appraiser to determine the home’s market value. The appraiser will take stock of the home’s condition and compare it with similar homes sold in the area.
Your lender chooses the appraiser and gives that opinion great weight. It will be difficult to get the lender to reconsider the value.
As long as you timely notify the seller, most sales contracts will give you the right to cancel and get your deposit back. If you still want the house, you can try to renegotiate with the seller to adjust the price to match the appraised value. The seller probably will agree to some compromise.
If the seller doesn’t budge, or only partly compromises, you have the choice to pay the additional amount out of pocket. But be careful here. Is this the home you really want? And will you be able to recoup the extra investment when it comes time to resell? Those are the questions you should be asking. It may be frustrating to continue looking for a home, but don’t let your desperation force you into overpaying.
Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar.
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