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From what I understand, we make an offer. If it is accepted, our lender will have the house appraised. Then we will be given the loan based on our sales price or the appraisal, whichever is lower. So my question is: waht if we make on offer of say $120,000 and it is accepted. The lender runs teh appraisal and finds out that the house is really worth $100,000. So we can only get a loan for $100,000.

My knowledge is very non expert, but...

It's my understanding that it is very, very rare for a house to appraise for less than agreed selling price. After all, that's the price that you & the seller fairly agreed on, which is the definition of fair market value.

You should be able to protect yourself by doing thorough comps beforehand to make sure that the house is not outrageously overpriced -- but you'd want to do that before making a fair offer anyway.

Good luck!


PS. I believe the standard contingency clause stating "buyer must obtain financing meeting X terms" would cover the worst-case scenario of an underappraisal -- since the bank would refuse to lend you the full amount, you would in fact not be able to obtain the loan you applied for, and therefore would be able to get out of the contract.
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