Need advice in a hurry

[James Gibbons]

Hi everyone. We just won a bid on a house, but instead of the buyer accepting our highest and best at 405,000, they countered with: How about 390,000 but you (the buyer) cover any deficiency in cash at closing. The list price was 350,000 and the real estate agent thinks the lowest possible appraisal would be 365,000. My concern, is that it could possibly appraise lower, leaving us with no recourse. Whats the worst case? We lose our EMD? Other than learning an expensive lesson, what else could happen? Ideally, it appraises for the contracted price, so we wont have to worry, but Im pretty damn nervous. This is a fantastic location and we're willing to stretch out to make this happen, but I need to know that we have an out....at least for my peace of mind if the appraisal comes in at 345,000.

Recent comps in the area (4 months ago) are 320,000 and 400,000.    Thoughts?????????  

[Evan Polaski]

@James Gibbons There are a lot of factors at play here:
- How much are you putting down?
- How much earnest do you have?
- How much cash do you have available? 
- How bad do you want the house?  
- How many other offers are on the house?

If the house has 10 other offers all around the $390k mark, I would not be concerned about it appraising, but you need to request that sellers agent meets appraiser and presents the 9 other offers in the same price point to the appraiser.  That alone should justify the market price of the property, and then it is on the appraiser to find comps that support the clear market price.

Back to Nick's comment, you are likely to be risking your earnest if you accept those terms and can't cover the difference.  If that is too big of a lose to gamble, I would walk away.  The fact that this was their counter, makes me assume you have a good offer by a long shot and so have some room to negotiate.  You could say I will cover the short fall in loan proceeds up to $10k, or something you can afford.