Buying Santa Cruz Real Estate: What if the Appraised Value is Lower than the Purchase Price?

Posted by Lauren Spencer on Thursday, July 28th, 2011 at 11:01pm.

What happens if you have a signed contract to purchase a piece of Santa Cruz real estate and the appraised value comes in lower than your agreed upon purchase price?   Unfortunately, that’s happening more often these days.

Don’t give up!  It is possible to salvage the deal.  Here are four options to consider, if you find yourself in this position:

#1:  Ask the lender for a review of the appraisal.
If you are aware of comparable sales numbers or any other pertinent data that was not considered by the appraiser, provide that information to your lender and ask for a review of the appraisal.  If problems are found with the first appraisal, ask your lender to order a second appraisal by a qualified real estate appraiser.

#2:  Ask the seller to drop the price to reflect the appraised value. 
The seller is in a difficult situation here.  If you cannot get a loan because the house appraised for less than the agreed upon purchase price, you can walk away from the deal, as long as you have a financing contingency in the contract.  On the other hand, if the seller will not take less money now, most likely, this whole scenario will play out again the next time around.  If the homeowner still needs to sell, he or she may be willing to drop their price to the appraised value.

#3:    Pay the difference between the appraised value and the purchase price.
If you’re willing to pay the difference between the appraised value and the purchase price, your lender will not protest.  Lenders are more than willing to put deals through, as long as the lenders’ interests are protected. Only pay the difference if you are absolutely positive the Santa Cruz real estate is worth the asking price, and you’ve exhausted all other options.

#4:  Walk away from the deal.
You like the home or you would not have made an offer; however, there are times when the best option is to walk away.  Buying Santa Cruz real estate is not the time to let your emotions get in the way of sound financial judgment.

If you’re ready to buy, I can guide you through the process of finding a home, negotiating a contract and getting an appraisal that’ll match or beat the selling price.  Please contact me at (831) 662-6522 or today to get started!

For more information, please visit my website at

About Lauren Spencer

Award-Winning Santa Cruz REALTOR®

Lauren Spencer is your local real estate expert, specializing in Santa Cruz real estate and surrounding communities—this is where she lives, works, and plays too. Let her know your questions about the community and county and she'll be happy to fill you in on all you want to know! Lauren Spencer has consistently been voted best local REALTOR in Santa Cruz and is always happy to offer her advice and expertise. Call her at: 800.226.4717.

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