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I'm trying to buy property in a very competitive market. I finally found a place I like and it is a Homepath property. I wanted to offer asking for the property because there are no comps to help come up with an offer amount. But, I was told that if the house doesn't appraise (I'll be obtaining a conventional loan not a Homepath mortgage loan), I would lose my earnest money. So I didn't offer. Needless to say, I'm disappointed! Anyone have any insight? Thanks!
Well, it all depends on your contract. Typically you have a financing contingency, if the home doesn't appraise then you can't get the financing you noted in your offer, so you could have an out without losing your deposit. THere are a lot of IFs here and the offer contract and addendum you sign should spell out all the contingencies.
In this competitive market, many sellers are adding specifics about appraisals that state the buyer cannot use the appraisal (within a certain tolerance) to cancel due to financing. In this case, you have to be willing and able to come up with the cash for the difference in the loan amount allowed per the appraisal and your offer price.
Once again, it all gets back to the contract. Your agent should be able to print out the standard Fannie Mae addendum off their web site so you can read if this specific clause applies. Is this what your agent told you (or a friend?).
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