A Seller is Not Obligated to Reduce the Purchase Price if the Property Appraises for Less Than the Agreed Upon Price
The buyer and seller entered into the Arizona REALTORS® Residential Resale Purchase Contract for the residential real property. The purchase price was $450,000.00. During escrow, the property was appraised for financing purposes. According to the appraisal, the property had a fair market value of $435,000.00. The buyers’ agent claimed, that in light of this appraisal, the seller is contractually obligated to reduce the purchase price to the appraised price of $435,000.00.
Is the seller obligated to reduce the purchase price in light of the appraisal?
If the property appraises for less than the purchase price, the buyer has the right to cancel the contract within five (5) days after receipt of the appraised value. See Section 2l. Thus, the buyer can either cancel or move forward with the transaction knowing that the purchase price is above the appraised value. There is no requirement, however, for the seller to reduce the purchase price based on an appraisal.