Negotiate after appraisal - Is it possible?

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Hi… I'm purchasing my dream home. It's a REO property. Right now, I'm in the escrow. The property appraisal has come back and well as all of us know, this is a declining market. The lender has asked us to pay more - around 7%. Well, I would like to negotiate with the lender to reduce the selling price. Is it possible? Do you think the lender would even listen to my offer?

sara · Posted: Fri Oct 30, 2009 2:09 am Post subject:

Hi Juanita,

There is no harm in negotiating with your lender for a favorable selling price. If you have an agreement with the lender regarding what needs to be done if the appraised value of the property is lower than selling price, then you would have a better chance to negotiate. If the lender had not received any other offer, then he may be ready to negotiate the selling price.

In case, if there are other offers, then the lender will not be ready to negotiate the selling price with you. He would get other buyers who would purchase the property giving that extra amount. In that situation, you should look out for some other deal.

Take care

apexoffice · Posted: Fri Oct 30, 2009 4:52 am Post subject:

I noticed you never specified if the appraisal was above or below the sales price. Many contracts have contingencies built in such to allow you to renegotiate or cancel the contract if the appraisal is below the sale price or if you fail to obtain financing. Otherwise, your contract is legally binding and they have a legal right to require you to complete the purchase as agreed. Although very uncommon, they could go as far as to sue you for breach of contract if you choose (on your own) not to buy the house at this point. They may be willing to renegotiate but what would be their incentive at this point if you are already pre-qualified for the loan and the appraisal is at or above the sale price? I am not trying to bust your bubble, but you may need to look at it from their perspective.

Having said that, the likelyhood that they would ever go to these lengths are very slim. They do not want to waste time with law suits, they just want this asset off of their books. So, you might have a chance, but don't be surprised if they say no.

gmakerley · Posted: Fri Oct 30, 2009 1:36 pm Post subject:

i'd think that you would have signed a contract that would give you the "out" if the value of the home, as appraised, is less than the purchase price. if your contract holds you to the originally agreed-upon price, methinks you're stuck.

eric1 · Posted: Wed Nov 18, 2009 6:43 am Post subject:

I agree, you may be "stuck". However, if you want out of the contract you can still accomplish this. You still need a home INSPECTION. This will reveal all of the things that are potentially wrong with the home. At that point, you could ask the homeowner to fix EVERYTHING on the list. Most likely they wont and you will be at a stalemate. Then if both parties do not agree, you can most likely walk away.

gmakerley · Posted: Wed Nov 18, 2009 8:40 am Post subject:

in connecticut, inspections are typically done prior to an appraisal. that, for many peoole, allows them to keep their funds on hand in case there are issues that may not be resolvable, and delay paying for an appraisal that may ultimately not be needed.

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