Appraise value vs selling price

7 Replies

If a property appraises for less than the asking price, will a bank still loan the asking price?

Asking 220k.

Appraised 2 years ago at 208k.

Great credit.

Fha loan.

4 unit primary residence.

@Jason Parker

Hey Jason. If the appraisal was 2 years ago, a new one would be done by the lender if you were to put it under contract. Depending on your market it’s very reasonable to expect it to be able to appraise for the asking price. 6,000 increase in value per year, that’s less than 3% appreciation.

Banks will only loan up to the appraised value. In my market right now we’re having bidding wars on properties and the appraised value can become an issue in these scenarios. For example say a house is listed for $400k but they get multiple offers and accept a offer for $450k. If the appraiser says the property is only worth $425k then the bank will only lend up to that amount. So the buyer can either come up with an additional $25k to cover the difference or the seller can reduce the price. Most of the time, in these scenarios, they tend to meet in the middle. 

That being said just because your property appraised at $208k 2 years ago does not mean it won’t appraise for more today. 

@Jason Parker No but you can pay the difference out of pocket. Either way though, the appraisal from 2 years ago isnt even valid anymore so id get a new appraisal, once the bank orders the appraisal it will likely appraise at purchase price.

Yes they will still loan on it, you just have to be comfortable with accepting the property higher than what you anticipate. Not all appraisals are a reflection of the market either depending on comparables from that area, sf, and condition of your home vs. the neighbors. 

In the rarer instance where appraisal does not come in at where you need to be I would assess what the property means to you. This sounds like a 'house hack' scenario so if buying this house will allow you to reduce or eliminate your living expenses and have some walking money, it is still aligned with your goals and the difference of $5,000 gets absorbed in the long term. 

Thank you all very much.  This is a house hack and I worked all my numbers using 220 as a selling price and I am happy with it at that figure.   It is my first time doing this and this is as close as I have been so far.  Im pretty excited to see how all this plays out!

Thanks again everybody.