If the buyer accepts our offer for a set price and after the appraisal is done it is worth more than the initial accepted price what happens?
We submitted an offer and it got accepted now we are waiting for the appraisal’s home value . The sellers added to the contract that if the appraisal is not satisfactory the seller can cancel the contract. Does this mean if the property’s value is higher they can cancel the contract?
- curtisports2Lv 78 months ago
No, it means just the opposite. It protects the seller from an appraisal below purchase price. Such language is really not needed. When an appraisal comes in low, the seller doesn't HAVE to do anything. The bank may deny the application unless the buyer makes up the difference in cash. It's then up to the buyer to decide if they still want the house anyway, and come up with the extra down payment money. The seller cannot be FORCED to take less. Therefore, language in the contract that 'lets' them out for a low appraisal is unnecessary.
Example: The lender requires a 10% down payment from the buyer. The contract price is $200,000. Down payment is $20,000, the mortgage applied for is $180,000.
But the property appraises for $190k The seller does not have to accept $190k. The lender will only loan 90% of that, or $171k. This means the buyer must come up with the additional $9,000 for down payment. If they can't, and the seller refuses to budge on the price (which they may), the contract is null and void. No language required in the contract to make that the case.
If the appraisal comes in high, the seller may be unhappy, thinking they sold too cheaply. Too bad for them. The bank and the buyer are both very happy. The bank's risk is lower and the buyer thinks they got a great deal.
- STEPHENLv 78 months ago
The appraisal value is only the opinion of the appraiser. The sellers have your offer.
- JudyLv 78 months ago
Sounds like it, if they put in into the acceptance of the contraact. If the apprasal came in lower than your offer, they wouldn't benefit from cancelling it The sellers did NOT accept your offer, they accepted it with their conditions.
- SlickterpLv 78 months ago
That is a really, really bad contingency to have allowed in the contract. It means if the seller finds the appraisal unsatisfactory, they can cancel. If he finds out he could get more money, you can bet that will be unsatisfactory to them.
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- sunshine_melLv 78 months ago
Who gets to decide whether it's satisfactory - is that covered?
- MaxiLv 78 months ago
You, th buyer pays for the appraisal and it is not given to the seller, so how would the seller know what it states unless you tell them or given them a copy....... until the sales contract is signed and exchanged either party can withdraw from the purchase ( unless you live in a country where the offer/acceptance of the offer is the contract and in those countries the appraisal is done by the buyer and given to all and any interested sellers before any offer is made)
- babyboomer1001Lv 78 months ago
That's exactly what it means.Source(s): Certified Paralegal, with 25+ years' experience.
- Anonymous8 months ago
Unless there is a clause in the contract to that effect (which is not common), no.
- A HunchLv 78 months ago
Unless the seller is paying for the appraisal, the seller will never know what the home appraised for. It's between the buyer and the lender.
"The sellers added to the contract that if the appraisal is not satisfactory the seller can cancel the contract. "
- If the house does not appraise for the contract price, the buyer won't be able to get a mortgage without increasing the downpayment
- Usually instead the buyer will ask to reduce the sales price to match the appraisal
- What the contract is saying is that if the appraisal comes in low, the seller can cancel the agreement instead of reducing the price (which they always could, but the seller just wanted extra protection).
- LILLLv 78 months ago
Why would sign such a contract?? And yes, it sounds like they can cancel the contract if they do not agree with the appraisal.