Sale price vs appraisal

[Ishviyan D.]

If an appraisal comes in at a higher amount than the sale price, does the lender fund based on the appraised value or the sale price? E.g, sale price is $80000. Appraisal comes in at $100000. If the bank lends at 80% LTV, would it provide funding in the amount of $64000 or $80000? If the latter, is the buyer essentially getting 100% financing for the purchase? I'm not tracking the mechanics. Any clarification would be appreciated. Thanks.

[Matt Lefebvre]

@Ishviyan D. the easy way to look at it... the bank is always going to go with the lower number. If your sales price is lower than the appraised price, they'll only lend up to allowed LTV for the sales price (75% if its a non-owner occupied investment property). If the appraised price comes in low, they'll only lend up to the allowed LTV for the appraised price. A low appraised price can kill deals. You can contest those, but its definitely a process and does not have a 100% success rate.