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Is $500k the cost of a starter home in your area? If not, I'd ask them to move down in price by the $5k. If this home goes back on the market, buyers are going to want to know why the house fell out of contract, and the seller is going to have to tell them it's because it didn't appraise. The sellers probably won't get a better offer, and if they do the next contract will likely have the same problem. It's rare to see an appraisal come in under contract price, they usually magically come in $5-10k over. They stretch as much as they can to hit your contract price.
OTOH, if people are throwing around $500k cash offers in your area, then asking the seller to come down on price probably won't work.
I hope you haven't told your agent you have the $$ to close the gap. He/she might offer it out of the commission to get the deal done if that's what it comes down to.
Given that the appraisal came in $5K lower than your offer, I'd ask the Seller to adjust the sales price to match the appraisal. Maybe they'll bite; maybe they won't. As long as no other offers are on the table, you could probably still get it for $530K if they decline to reduce the price.
In the scheme of things, an appraisal is just an opinion of market value...and in that price range, a $5k difference is rather minuscule. The appraiser's valuation and your valuation were nearly the same. Buy it if you like it, or walk if you feel you can get a better deal elsewhere. The choice is yours.
Given that the appraisal came in $5K lower than your offer, I'd ask the Seller to adjust the sales price to match the appraisal.
This is ^^ what I would do. Ask the seller to lower the price to the appraised value. Yes, $5000 is a small amount when buying a $500k+ home but for me - psychologically - I would rather not pay more than what the house is worth. The idea of being "upside down" doesn't sit well with me.
However, if the seller refuses to lower the price, I really like the house and plan to live in it for a number of years then I would just suck it up and buy the house.
Given that the appraisal came in $5K lower than your offer, I'd ask the Seller to adjust the sales price to match the appraisal. Maybe they'll bite; maybe they won't. As long as no other offers are on the table, you could probably still get it for $530K if they decline to reduce the price.
In the scheme of things, an appraisal is just an opinion of market value...and in that price range, a $5k difference is rather minuscule. The appraiser's valuation and your valuation were nearly the same. Buy it if you like it, or walk if you feel you can get a better deal elsewhere. The choice is yours.
Sure. There's nothing wrong with trying to get a lower price. You're not lowballing the seller in any way. It's only a $5,000 difference. Don't believe what the realtor says about bidding wars, the showings she's had/will have, and how desirable the house is. That may or may not be true, but sometimes it's just a way of pressuring you to buy. Only purchase if YOU really want the home, not as a means of taking it off the market from others. And if you truly want it, a $5000 difference is very little on a $500K home, so even if they don't negotiate, it's probably worth it to you to shell out the extra yourself.
How much do you lose if you walk away from the house (Due Diligence, Earnest money, Cost of appraisal and inspections?)
I would ask the seller to come down in price. It's only 5K and for a home that price I would think the hassle of relisting and trying to find another seller would be less desirable for the seller than taking a minor price cut. After all, when properties re-list, house hunters have the perception that something wasn't right with the property and sometimes the amount of traffic encountered when the home first lists is not seen again. Plus, they have a buyer who has agreed to their longer closing terms.
Alternatively, you could ask that they meet you in the middle with a 2500 Price concession.
Have you had them address many items on the inspection report or did you waive inspection?
I say if within 1% on a $500K deal, and I want it then it is close enough.
I agree! If you put it in the sellers ballpark and ask the seller to come down (which you can) they can say no and then offer it to one of the other bidders who will be willing to pay more. Depends how much you want the property. Every situation is different so I can't tell you what I'd do, but if it's all I wanted $5k isn't much on a $500k home.
In the grand scheme of things, 5K on a 500k home is really not a financial issue. Me, I would hedge my bets that the seller doesn't want to hassle starting the process over again with another buyer and would ask them to lower the price by 5K. Completely reasonable and heh, 5k is 5k. Of course this is all dependent on how much I might kick myself if I lost out on the house.
Under contract on a home right now and the appraisal just came in $5k under the contract price. I know the potential options I have, but just curious what others would do in this situation.
The house in question is a townhome in a planned development in the suburbs of a large city. List price was $529k. We viewed about 5 homes in this community prior to viewing this one and making an offer. The other homes were listed between $500k and $515k and most of them are still on the market. This particular home was far and away the best of the homes in this community - lots of money spent on this property and many upgrades - clear that the owners had invested quite a bit of money into the home. That said, they listed at the high end of where the market has been in this neighborhood.
We made an offer of $530k the second day this house was on the market. The listing agent said there were 6 showings lined up the next day and that the seller's had priced this to start a bidding war. Listing agent also pressed us to remove the settlement contingency for the sale of our current home, which we did. Sellers also wanted a closing over 90 days out because they are building a home, and we accommodated this request in our offer (which is a bit of a pain because it is pretty costly to lock your interest rate that far out). We were the first would-be buyers to make an offer on this home, but we were anticipating that other offers might come in, so we wanted to be competitive and let the sellers know that we wanted to be in the game. Late the next day, our offer was accepted without any counter. We don't know whether any other offers came in or, if they did, what they were. The listing agent may have been all talk or there may have legitimately been competition for this home. Hard to say.
So, appraisal comes in today, 10 days after contract ratification, at $525k. It isn't going to be an issue for me to come up with the extra $5k if push comes to shove, but I certainly wouldn't be thrilled about it. There is another house in the community that we liked, is currently on the market for $500k, and has been on the market since April 14th. We are not personally in any sort of big hurry because we have 90 days of temporary housing my employer is providing. That said, we did like this home quite a bit better than the other one, and we obviously thought the house was worth $530k when we made the offer.
Any thoughts greatly appreciated.
Okay.
1. I know the market in NoVA quite well, and Springfield specifically as I have sold an income property there recently. There are a few red flags for me.
2. This community has lots of inventory.
2. The seller wants a long close -this can affect your interest rate, so you will be paying more over the life of the loan. (Many lenders will only lock for 60 days without an increase.)
3. Comps are lower on available inventory. Again, there are more houses-- you looked at several.
4. Seller "had lots of people coming" but "accepted without a counter." Seller was smart, knew you were hooked. They knew a sweet offer when it came over and jumped on it.
5. House does not appraise. It simply isn't worth that much. Why? Because the lender can see that others sold for less. And being a townhouse community I am sure that these are truly apples to apples in terms of square footage, lot size, etc.
So if you want to pay $5K for this house that your lender is flat out telling you is not worth it, go for it. But if you do, plan on being there long enough that you can break even when you sell.
Personally I would ask the SELLER to make up the difference or walk. If this was a very unique property, I might feel differently. You are already making a concession to the seller on the long close. They can pony up a bit of cash as their list price seems inflated. But that's me.
Last edited by emotiioo; 05-18-2017 at 10:30 AM..
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