Listed a property and got an offer for a full asking price. The buyer is an FHA buyer and not asking for closing costs. Instead they are adding closing cost of $3200 to a purchase price. Property listed at $84,800. Offering $88k.I am afraid I will run into appraisal issue. My property will not appraise for 88K. Any ideas how I may navigate this. Ps buyer is not willing to come out of pocket on the CC.

Originally posted by @Jafar Seife :

Listed a property and got an offer for a full asking price. The buyer is an FHA buyer and not asking for closing costs. Instead they are adding closing cost of $3200 to a purchase price. Property listed at $84,800. Offering $88k.I am afraid I will run into appraisal issue. My property will not appraise for 88K. Any ideas how I may navigate this. Ps buyer is not willing to come out of pocket on the CC.

Few things I don't like about this. If there are realtors in on this you will be paying higher commissions based on the 88K rather than the 84.8K. You can raise the value of the home if it's doable and pay the closing costs but if it's short and you are using the same % on closing costs the lesser appraised value will eat away from your original 84.8K value. You need to cap the contribution ahead of time to protect your self. For all FHA loans, the seller can contribute up to 6%. So you can negotiate that you will credit up to but not more than 2.5% or 3.5% ... etc.

88k*3.63%= $3,200.       88,000-3200= $84,800. (even)

If new appraisal is 87K*3.63%= $3,158.       87,000-3158= $83,842. (-958)

If 87K*2.5%= $2,175.       87,000-2175= $84,825 (+25)

Guifre, thank you so much. The property is listed 4k more than a similar property sold for so far. It may not appraise for a listing price let alone with the added closing cost. The reason it is getting the offer is the market is hot and there are no properties on the market. I will only pay the buying agent as far as commission. The other half stays home. I am risking not getting the list price plus 3% in commission which will eat further into my profit. I will definitely try to cap it per your recommendation. Thank you