Appraisal Shortfall Update

Update..... The california lender will NOT allow a second appraisal and will NOT allow for the appraisal to be challenged.... hmmmm... that sure does make it tough. In any case, these are the remaining options for the buyer: He can switch lenders, there are several lenders who have already reviewed the package and can have the loan closed in time with a new and updated appraisal or he can serve notice to the seller under the financing contingency (with a supporting document from his lender) that he no longer qualifies for the loan amount he originally applied for.

The seller is standing firm on their price, they will NOT make any concession towards the price. This, again, could be a real can of worms for both parties. Nobody wins in a situation like this unless there is some agreement reached between the parties. The home has literally been off the market now for several weeks and in a buyer's market every day the house stays on the market seems to be reflected in lower offers. The next offer to the seller may be even lower.

The buyer could potentially have his earnest money deposit held by the escrow agent if the seller does not sign a release - again, this could get ugly. Since closing was originally set for the 15th of January, we need to resolve this very quickly. As I previously stated, in the contract there is a provision that the buyer is in default if he does not settle on the date specified in the contract even if the financing contingency has not been removed and even if the buyer must make up the difference in an appraisal shortfall.

So, as we stand on the rock and the other side stands on the hard place we'll see where this one goes - it's rare not to be able to find some middle ground and work an agreement acceptable to both - again, I'll keep you posted....

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