As a homeowner or real estate investor, it’s important to understand the appraisal process in order to prepare for any possible scenario. One question that frequently arises is, what happens if my house appraises for less than the purchase price?
Firstly, it’s important to know that loan amounts are based on the lesser of the purchase price or the appraised value. So, if the house you’re interested in buying appraises for less than the purchase price, you have a few options.
One option is to ask the seller to drop the sales price to the appraised value. However, it’s important to keep in mind that sellers are not obliged to agree to this. Another option is to pay the difference of the appraised value and the purchase price in cash, as you won’t be able to include the difference in your loan amount.
A third option is for you and the seller to agree on a new purchase price between the sales price and the appraised value. Lastly, you can cancel the contract and receive a refund of your earnest money assuming the contract was contingent on the appraised value meeting the sales price.
It’s important to have a contingency plan in place in case your desired property appraises for less than the purchase price. It may be disappointing, but it’s better to be prepared than to be caught off guard.
On the other hand, what happens if your house appraises for more than the purchase price? Congratulations! Your purchase price will not increase and you’ve just captured instant equity in your new home or investment property.
At Blink Lending, we understand that buying a home or property can be a complex process. Our experienced team is here to help guide you through the process, answer your questions, and ensure you feel confident in your decision. Whether you’re a first-time homebuyer or a seasoned real estate investor, we encourage you to apply online or schedule a time to discuss your options when you’re ready to buy your next property.
