Need advice on home buying situation!

knottie9c5ed33df4bbd226

My fiance and I are in the middle of purchasing a home. We offered the asking price and it was accepted. However, the bank appraised the house at $5K less than the asking price. Our Realtor spoke with the seller and he is not willing to take the appraisal price. Our Realtor thinks he might meet us halfway, but then won't contribute to the closing costs anymore like we previously agreed to. I love the house, but I feel like the seller has been a bit difficult about a few things during this process (repairs, letting us in to see it, etc) and I don't want to just roll over and give him all my money. 

I do know the sellers already have packed the house, purchased a new one and are moving this week. I don't know if I believe he would really play hard ball and then risk us backing out. He would have to go through the whole process again..I just don't know what we should do! Fiance says he will do whatever I want to do.

Suggestions/advice?

southernbelle0915

Exactly this happened to us in buying our first house, except the appraisal value was $20K below our agreed upon price. 

We said "we aren't willing to pay more than the house is worth and we aren't willing to make up $20K in cash" (the bank won't loan more than the house is worth). Seller paid for a second appraisal with same results. ETA: we ended up paying the appraisal price with A LOT of grumbling from the seller. This was in a worse market though and he had a deal fall through before we came along, so circumstances were a lot different.

I think it boils down to two things 1) Can you pony up the cash to make up the difference? and 2) If the answer to #1 is yes, do you want the house badly enough to do that. Forget the seller's history of difficulty and any personal beef you have with him. Either way, he'll be out of the picture soon (you'll buy the house and he's out or you'll walk away and he's out).

AprilH81

You can request another appraisal from your mortgage company and I *think* the seller also has the opportunity to order another appraisal.

flyingfoxes

I guess it depends on how much you want the house.  $5k sounds like a lot, but probably really isn't in the long run.  The $20k that @southerbelle0915 mentioned would be way more of a dealbreaker to me. 

knottie9c5ed33df4bbd226

@southerbelle0915, what happened in your situation? 

@april182015bride, I really do want it..but I am stubborn and not one to give in. It just doesn't make sense to me to pay more than what the bank says it is worth, right?

@aprilh81, if I have another appraisal done, do I pay for that?

AprilH81

courtneyhindo said:

@southerbelle0915, what happened in your situation? 

@april182015bride, I really do want it..but I am stubborn and not one to give in. It just doesn't make sense to me to pay more than what the bank says it is worth, right?

@aprilh81, if I have another appraisal done, do I pay for that?

Yes, if you order a new appraisal you will have to pay for it (probably increase your closing costs).  I think they are about $500 depending on your area.  Not cheap, but cheaper than paying $5,000 more for a house than what it is worth.

thisismynickname2

What's interesting to me is that something is only worth what someone's willing to pay. You offerred what the seller wanted, and thus you established its worth. You have to decide for yourself if $5k is worth quibbling over.

southernbelle0915

courtneyhindo said:

@southerbelle0915, what happened in your situation? 

@april182015bride, I really do want it..but I am stubborn and not one to give in. It just doesn't make sense to me to pay more than what the bank says it is worth, right?

@aprilh81, if I have another appraisal done, do I pay for that?

We ended up paying what the appraisal said the house was worth - more details in my PP. 

Don't let your stubbornness or pride guide this decision. It's the biggest financial transaction you will probably make and it's unwise to bring emotions into it. Do you think you'll make the $5K back when you re-sell it? And/Or are you willing to pay $5K more for what you want? That's what it boils down to (money and demand). If the answers are no, then you walk. Can you picture yourself walking away and finding another house? If so, it may be wise to do so.

Is there anyone else bidding on this house? When we phrased this to the seller, we made it sound like we COULDN'T pony up the cash (not that we didn't WANT to). It makes a difference if you decide to go that route. 

OliveOilsMom

I would give the seller an option. Either pay for a new appraisal and then you can negotiate from there or the selling price is the current appraisal from your mortgage company and he pays the closing costs. Be prepared to walk away. He is already packed up and ready to go himself. Push back at him. He doesn't seem to realize that he is in the worse position right now.

jenna8984

Honestly, I'd tell the seller I was walking just so they'd come to their senses and lower it the 5k.And you know why? Because if the next buyer comes along and it appraises for the same thing they will be in the same situation. Hardly anyone is ever going to pay over appraisal so the owners will be screwed for possibly years with this house unless they accept that.

JoanE2012

What's the market like in your area? That would be the deciding factor for me. If it's a hot market and you love the house and there's not much else out there, I'd pay. If it's a slow market with lots of inventory, then tell them you're walking.

SBmini

The seller is stupid. $5,000 is NOTHING when you are selling an object worth as much as a house. The bank may not give you the additional $5,000 in the loan. In terms of what it means as a part of your monthly payment, it's probably like $5. So I wouldn't walk away over it. But you will want to talk to your bank to find your best path forward- either take the closing costs or meet half way. 

theartistformerlyknownas

A good friend of mine is a Realtor, and he said that 11 out of his last 13 sales have under-appraised. The banks are overcorrecting after getting burned so badly in the housing collapse. 

You determined what this house was worth to you when you made your offer. Value is subjective - the bank's word on a house's value isn't the be-all end-all, that's just the amount of risk they're willing to take. Over 30 years, $5k is really negligible. If you love this house, he'll meet you in the middle and you can come up with the rest, I don't think you should let it slip away.

(Edited to correct a number)

knottie9c5ed33df4bbd226

I spoke with the lender and because we don't have the extra cash to pay up front, we would need some sort of insurance that's another $100/month. I've spent all day talking to the Realtor, loan officer, fiance & friends/family..I think we are going to stick firm with the appraisal price and if the seller says no then we will walk away. Kind of bummed, but I know there will be other houses.