when buying a home, is the financing based on the appraised value or the selling price?
As a “mortgage man” and a former real estate man, I completely agree that appraisers should not have the disclosed contract sales price disclosed to them. If it is conceded that there is information that they need from the contract, then the sales price could still be deleted, along with any mortgage information in the mortgage contingency which might tip the appraiser off that it is a 100% loan (ie: VA), etc. The value is the value. No-one will ever convince me that most appraisers are not trying to hit a target and utilizing comps that support that target. Theorectically, an appraiser should have to use ALL of the available comps after omitting sales that are not “arms-length”, that involve a duress situation, or have any other characteristic that is a tipoff that the price may not meet the definition of Fair Market Value. Because of the work that would entail, lender only ask that a minimum of three representative comps be used…though they can ask for additional comps. And, come o
Mack is correct. All allowances from the seller to the buyer are concessions…concessions are capped by a percentage of the purchase price. I do disagree with all those that have said the financing is based on the selling price because in reality the financing is based on the appraised value. If a buyer is doing 100% financing and the home does not appraise then the loan would not be approved unless one of four things happened. If the home does not and cannot appraise for the selling price then (1) the selling price has to be reduced or (2) the buyer has to bring additional money to the closing to cover the gap or (3) the contract is terminated or (4) a combination of selling price being reduced and buyer bringing additional money to closing to cover the gap. The buyers options in the event that the home does not appraise should be stipulated within the contract. If this is not stipulated and the buyer has no contingencies remaining within the contract then the buyer will have to clos
Related Questions
- I am buying a home in the Santa Barbara real estate market and want to understand the difference between list price, sales price and appraised value. Can you explain that?
- when buying a home, is the financing based on the appraised value or the selling price?
- What is the difference between the list price, selling price, and appraised value?