Reply to Have prices the last month jumped the shark?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I grew up near both of those 600 K range homes--- those are total bargains for what they are. Mature landscaping, great schools, great communities. I'll be curious to see what they go for because where I live now you can't find a SFH for that pirce.[/quote]

This makes it extra hard - if they being listed low, a buyer just has no idea what to bid for the house if appraisal is an issue.  If I'm waiving appraisal and offering over 100K over ask, that's a huge chunk of cash.[/quote]

Okay, so this is an additional question I have. I am the (naively?) optimistic buyer trying to buy this summer without all cash. We have enough cash to put 30% down on a purchase price of 1 million, in a normal market (averaging numbers for simplicity). But let's say I actually buy a house that appraises at 900, but sells for 1 million. Is my 300k in cash at all helpful in this situation? Can I use some of it to make up the difference between appraisal and actual price? I'm not a first time homebuyer, but this is a new situation for me.[/quote]

If I were you, I would only offer 200K down and hold on to an extra 100K.  Then if it appraises at the K price, or not significantly over, just put the rest of 100K into the downpayment.[/quote]

Why couldn’t you offer $300K down in this situation? Why hold the $100K back? This wasn’t my post, but in this situation, if the $1M sales price house only appraises for $900K and a down payment of $300K is offered, the buyer doesn’t have to come up with any other funds even though the house didn’t appraise at the sales price, right? IOW, the $300K down payment is enough to cover the appraisal shortfall, right?[/quote]

I'm the poster asking this additional question. I don't understand what you mean, but I'm going to read it out loud to my mortgage broker and see if it's a thing  :lol: We'd love to have a lower monthly payment (daycare poor).[/quote]

I am not an expert, but I don't think so?  If you are offering 300k on a 1M house, you are financing 700k, the difference between the price and the down payment.  If the house appraises at 900K, the lender will only cover the difference between the appraisal price (900) and the down payment (300).  In other words, you get a loan of 600k instead of 700k, so you have to come up with the additional 100k.[/quote]

All this being said, maybe the lender can get an appraisal waiver with that large a dp. [/quote]

The point is that the bank will only lend against appraised value (900k in this example). Most banks require at least 20% down (180k). If you have 300k in cash you could theoretically cover an appraisal shortfall of up to 120k. 
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