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Old 10-15-2020, 07:16 AM
 
Location: Needham, MA
8,539 posts, read 13,961,275 times
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Quote:
Originally Posted by 1insider View Post
Unless it's a 100% loan, the appraisal needs to hit the contract price. Anything less than the contract price is going to require more money down from the buyer unless the seller agrees to reduce price.
Quote:
Originally Posted by hooligan View Post
Correct. That wasn't the OP's question, though.
Seems to me that answers the OP's question 95%. The OP didn't really offer all the information needed to get a 100% answer.

I'm not a loan officer, but my experience has been that the answer will vary a bit depending upon the loan product the buyer is using. In my market, I don't see products like VA, FHA, USDA, etc. I just see standard conforming loans. Generally speaking, my experience with that loan product is that the appraisal needs to meet or exceed the offer price up to a point where the loan is 80% of the purchase price. If a buyer is financing less than 80% then there tends to be some wiggle room in the appraisal.

Example:

House sells for $500K. If the buyer is putting down $50K (10%) then the appraisal needs to come in at $500K or more. If it comes in at $480K then someone will need to bridge that gap of $20K whether it's the buyer putting down more cash, the seller reducing the price, or some combination of both. If the buyer had put down $200K and the appraisal came in at $480K then the loan of $300K would still be approved.
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Old 10-15-2020, 07:54 AM
 
Location: Meridian Township, MI
262 posts, read 162,744 times
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As an appraiser, the appraisal will come in at the agreed upon price - so long as there are comps in the area to support the agreed upon price. Almost always, appraisals include "adjustments" that may include market uptick in prices due to lower interest rates, etc, and some comps may need to be used from further away neighborhood in order to achieve that agreed upon price.
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Old 10-15-2020, 02:18 PM
 
2,280 posts, read 1,570,764 times
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Quote:
Originally Posted by tidalforce View Post
First time seller/poster. We received an offer of $640k for our home in Colorado and the buyer presented a letter from their lender that they were approved for $575k. By my math that means they only need to come up with $65k in cash. My real estate agent has concerns about this offer regarding the home appraisal. As long as the appraisal comes in above $575 I should be fine, correct? Or are there other factors I'm missing.

Thanks.
The letter says they are approved for a $575k loan. With an offer of $640,000 it means they will come in with 10-15-percent down payment.

Yes, the appraisal must be $640k or higher. If the buyer's offer has an appraisal stipulation (most smart buyers do) they can back out of the deal or you reduce the purchase price. This is very standard.
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