Concerned that my Home Sold for Over Asking Price

Question: I'm selling my home in a great area. We had many offers and the one we took was $20,000 over the asking price. The buyers are putting in a lot of cash and are only financing $100,000 of the $600,000 sale price. We're afraid that our house will not be worth that much, but does the lender care?

Answer: Lenders care very much about value and risk. They will make a loan based on the sale price or the appraised value, whichever is less. If a buyer wants to pay more, that's okay -- as long as the additional price is not paid with lender funds.

Appraisal problems are not common, but they do happen. When Realtors look at comparable properties that have sold, they also do a little give and take. Compared to the similar homes, the subject home may have more land, more updates, more square footage, etc. This is how a higher asking price is justified. Obviously, the buyer agrees, because he has accepted the sellers selling price. An appraisal is not an exact science, it is more of an art, or opinion of the appraiser, based on what he has seen with comparable properties that have sold.

In your case, you have a home selling for $600,000 and a borrower who is putting up $500,000 in cash. The lender is providing $100,000. The lender wants to be certain that in the event of foreclosure the property has sufficient value to re-pay the loan.

In this case, even if the property sold at a 75 percent discount from the sale price, there would still be enough value to re-pay the lender. From the lender's perspective, this is a loan situation with virtually no risk because there is so much equity in the property -- that $500k put up by the purchaser.