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Chelsea State Bank

Chelsea State Bank

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What to Do When the Home Appraisal Is Lower Than Offer

September 4, 2019

Appraisal Lower Than Offer OptionsIf the appraisal for your dream home is lower than your offer, you need to look at your next steps. Don’t panic, you do have many options.

Check Appraisal Contingency Clause

First, look over the appraisal contingency clause. This clause generally allows you to reevaluate the situation or renegotiate if needed. Maybe the appraisal estimate of the home’s value was inaccurate, did not take into account most recent comparable properties, so ask for a review.

You can cancel the transaction. Many purchase contracts contain a loan contingency. It allows termination if the appraisal comes in low, and you will not qualify to buy the property at the agreed-to terms in the contract. A properly written loan contingency allows you, the buyer, to cancel the contract and requires the seller to release your earnest money deposit.

If you were putting down 20 percent, for example, you could switch to a 10 percent down loan program and use that newly freed-up cash to negotiate a higher cash payment directly to the seller.

Look Into a Second Appraisal if Home Appraisal is Lower than Offer

You can try working with your lender to get a second appraisal. In some instances, especially if you are well qualified, the seller may be willing to pay for a second appraisal to keep the deal on the table. As the buyer you can also make up the difference in cash. Talk to your lender. At Chelsea State Bank, our mortgage officers look at the appraisal to the extent it affects the loan-to-value ratio.

Talk to the Seller About Options

Another potential solution to the low appraisal problem is for the seller to agree to lower the price. Often this is the best solution if the home was overpriced or the value was inflated. This could be an advantage for the seller. There is no guarantee that if the buyer walks away, the seller won’t receive a low appraisal from the second buyer’s lender. In addition, the time and trouble it takes to put the home back on the market and try to sell the property again.

You may also be able to work out a compromise on the value with the seller. Sometimes a seller will back off a little bit on you paying the entire difference and will settle somewhere between a full cash contribution and completely lowering the price. For example, regarding a difference of $10,000, a seller might agree to accept $5,000 in cash and lower the price by $5,000.

The seller can also offer to carry a second mortgage for the difference. If you really want the home but cannot come up with the difference in cash, making payments or a lump sum payment at a later date to the seller holding a second mortgage is an option.

When getting a mortgage loan always talk to one of our experts at Chelsea State Bank about the appraisal and loan process. You want to have a good understanding on what to expect from start to closing and beyond. Chelsea State Bank can help you. Call us at (734) 475-4210 or visit us online here.

Chelsea State Bank is an Equal Housing Lender

Related posts:

  • How Long Does It Take to Get a Mortgage?
  • The 5 Step Process to Build a House
  • 10 Factors That Qualify You For A USDA Mortgage Loan in Michigan
  • How to Refinance a Home: A Beginners Guide
Previous Post: « Save To Buy Your First Home – How Much Do You Really Need?
Next Post: Chelsea State Bank Welcomes New President Joanne Rau »

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Related Posts

  1. How Long Does It Take to Get a Mortgage?
  2. The 5 Step Process to Build a House
  3. 10 Factors That Qualify You For A USDA Mortgage Loan in Michigan
  4. How to Refinance a Home: A Beginners Guide

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Free Kasasa Cash Checking Benefits

The average interest rate earned on most checking accounts is not even 1%! And many banks charge you just to keep your account open. A Free Kasasa Cash Checking account through Chelsea State Bank is not only free to use and keep open, but it offers some of the highest annual APY1 of any account. There’s no minimum balance, no fees, and you have access to online banking services, as well as personal service from Chelsea State Bank.

  • Earn 2.53% APY1 annually on balances up to and including $10,000*
  • Earn .25% APY1 on balances over $10,000*
  • Earn .05% APY1 if qualifications are not met*
  • No maintenance fees
  • Full-service online banking
  • Personal service with Chelsea State Bank
  • Refunds on ATM withdrawal fees up to $25*
  • $1.00 minimum deposit to open. No minimum balance requirements.

*To earn your rewards, enrollments must be in place and all of the following transactions and activities must post and settle to your Kasasa Cash Back account during each Monthly Qualification Cycle:

  • At least 12 debit card purchases
  • Be enrolled in and agree to receive e-statements
  • Be enrolled in and log into online banking.

1 APY = Annual Percentage Yield. Rate is variable and may change at any time. Fees may reduce the earnings on this account. APY is accurate as of 04/01/2020.

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Free Kasasa Cash Back Checking Benefits

Most cash back rewards cards sound great at first, until you read the fine print: You only get rewards on certain items, at certain stores, at certain times. With a Free Kasasa Cash Back Checking account, you get 4% cash back on all purchases up to $200 monthly. That’s $96 cash back every year. And you still have access to top-notch online banking services, one-on-one service through Chelsea State Bank, no maintenance fees, and refunds on ATM withdrawal fees*.

  • Earn 4% cash back on all purchases up to $200*
  • No maintenance fees
  • Full-service online banking
  • Personal service with Chelsea State Bank
  • Refunds on ATM withdrawal fees up to $25*
  • $1.00 minimum deposit to open. No minimum balance requirements.

*To earn your rewards, enrollments must be in place and all of the following transactions and activities must post and settle to your Kasasa Cash Back account during each Monthly Qualification Cycle:

  • At least 12 debit card purchases
  • Be enrolled in and agree to receive e-statements
  • Be enrolled in and log into online banking

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Free Kasasa Tunes Checking Benefits

Online shopping and services allow you to get what you need when you need it. But did you know that you can earn separate rewards on your online purchases? With a Kasasa Tunes account, you can earn $10 in rewards every month straight back to your iTunes®, Amazon®, or Google Play™ accounts. The best part is, you can make purchases anywhere and get rewards back to your online accounts!

  • Earn $10 monthly to your iTunes®, Amazon®, or Google Play™ accounts
  • No maintenance fees
  • Full-service online banking
  • Personal service with Chelsea State Bank
  • Refunds on ATM withdrawal fees up to $25
  • $1.00 minimum deposit to open. No minimum balance requirements.

To earn your rewards, enrollments must be in place and all of the following transactions and activities must post and settle to your Kasasa Tunes account during each Monthly Qualification Cycle:

  • At least 12 debit card purchases
  • Be enrolled in and agree to receive e-statements
  • Be enrolled in and log into online banking

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