What is the impact of a home appraisal coming in lower than the purchase price on a mortgage in Oregon?

@emilie.windler  When a home appraisal comes in lower than the purchase price on a mortgage in Oregon (or any other state), it can have several implications for both the buyer and the seller:

1. Re-Negotiation: The buyer can use the lower appraisal as a reason to negotiate with the seller for a lower purchase price. The seller might agree to reduce the price to match the appraised value, or they might negotiate a compromise somewhere in between.
2. Additional Payment by Buyer: If the seller refuses to lower the price, the buyer can decide to make up the difference in cash between the agreed purchase price and the appraised value. This additional payment covers the shortfall between the loan amount approved by the lender and the actual purchase price.
3. Reappraisal or Challenge: In some cases, buyers may request a second appraisal or challenge the initial appraisal if they believe there were errors or discrepancies that affected the valuation.
4. Seller's Options: If the seller disagrees with the appraised value and subsequent negotiations fail, they may choose to find another buyer who is willing to pay the initial price or decide to keep the property.
5. Lender's Considerations: Lenders usually lend based on the appraised value to mitigate their risk. If the appraised value is significantly lower than the purchase price, they might reconsider the loan terms or the amount they are willing to lend. This could result in the buyer needing to increase their down payment to meet the lender's requirements.
6. Potential Contract Cancellation: Depending on the terms of the purchase agreement, if the discrepancy between the purchase price and the appraised value cannot be resolved through negotiation, the buyer might have the option to cancel the contract without penalty.

In Oregon, as in many other states, real estate transactions are governed by state laws and regulations that outline the procedures and rights of both buyers and sellers in such situations. It's advisable for both parties to consult with their real estate agents and/or attorneys to understand their rights and options in case of a low home appraisal.