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They could possibly hold back what is referred to a “Seller Held 2nd Mortgage” this would not be free money, you would have to enter into an agreement with them to repay the 10% you were looking for to cover your 20% down payment. It would work like any other 2nd mortgage. Check with your lender to see if they would allow, then check with the seller to see if they would consider Have your local lender, explain the details more fully as well.
Nice thought, but not going to work. You can certainly offer more than the asking price and ask for seller contributions to cover your prepaid expenses and closing costs, but at the time of purchase, the value of the home is deemed to be the LESSOR of the appraised value or sales price. There is no such thing as “instant equity” in a purchase as far as lenders are concerned.
Ted is right. The assessed value has nothing to do with the appraised value, and it is unrelated to the asking price. If the asking price is significantly below the assessed value, the property is probably over-assessed. Taxing authorities only re-assess periodically but market values fluctuate constantly. You should not consider the tax assessment as an indication of the market value when shopping for a home. As a result of the mortgage crisis of the past few years, lenders are more cautious than ever to ensure that they don’t “over-lend” on property. So if you contract to pay more than the appraised value and don’t get the financing because the appraisal is lower than the contract price, you could get stuck paying more than the house is worth. A carefully crafted financing and appraisal contingency in your contract is vital!
If a home is being sold for a substantial amount less than the tax value; can I offer a greater amount above the asking price to closely match the tax value (and assuming the home will be assessed for that value) and ask the seller for that amount back at closing to help with a down payment? If I only have 10% to put down but the above scenario could work then I could get 20% down and not pay PMI. Is this possible & are many sellers (and mortgage companies) open to this?
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