203k Loan & Appraisal Question
First and Foremost, I want to thank everyone for their help in this long and educational process.
I am currently in the process of buying a Duplex that has been partially rehabbed. The property needs painting and new windows, thus, the 203k Loan.
The asking price is 86,000. I offered full asking price + cover closing cost. According to my agent, the seller is not wiling to budge.
My question-
I am worried that the appraised value might be close to the purchase price + rehab price. I understand that the 203k allows up to 110% of the appraised price. What happens if the purchase price+rehab price exceeds the the 110% appraised price once a contract is signed? It is my understanding that I will be responsible for the difference...is this true?
Is having the property pre-appraised my only recourse? Is it possible that my lender will use this appraisal?
I don't want to get each property pre-appraised because that obviously will get expensive but I also want to be able to walk away from the deal if the numbers don't work out.
I am a first time home buyer. I am just looking for advice so that I don't end up upside down in this deal. I am okay with paying up to 110% of the appraised value but I don't want to have to cover the difference if the rehabbed value is 130% of the appraised value.