My purchase contract price is higher than the number my VA appraisal came back at. What are my options?

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Accepted Answer

Short answer: you have three real options, and VA's rules protect your earnest money if you decide to walk away. Every VA purchase contract has to include a required provision called the VA escape clause, sometimes called the option clause. It states that you aren't obligated to complete the purchase, and won't lose your earnest money, if the home's appraised value comes in below the contract price. Ask the seller to lower the price to match the appraisal. In a lot of markets this is the outcome sellers agree to first. Pay the difference in cash at closing. A VA loan is based on whichever number is lower, the sale price or the appraised value. If the seller won't move on price, you can bring the gap between the two in cash yourself. That cash can't come from the loan. Cancel the contract. The escape clause protects your earnest money if you and the seller can't agree on a lower price and you're not willing to cover the gap. If you think the appraiser missed recent comparable sales or made a factual error, your lender can ask VA for a Reconsideration of Value before you decide between these three options. Gene can go over your specific contract numbers with you if a low appraisal comes back on a home you're under contract for.