Question

Jacob included an appraisal contingency in his offer on Leilani's house, and Leilani accepted the offer. The appraisal came in $4,000 less than the list price of the home. Which of these is NOT an option Jacob and Leilani have?

a) Jacob can come to the table with additional cash to cover the gap.
b) Jacob can force the lender to increase the loan-to-value ratio to cover the gap.
c) Leilani can reduce the property's list price to the appraised value.
d) Leilani can terminate the contract.

Answer 1

Jacob cannot force the lender to increase the loan-to-value ratio to cover the appraisal gap; this is a decision made by the lender and not within the buyer's control. Option b

Step-by-step explanation:

Jacob included an appraisal contingency in his offer on Leilani's house, which Leilani accepted. Now that the appraisal has come in $4,000 less than the list price, they are faced with some options on how to handle this gap. Jacob's options could include coming up with additional cash to cover the difference or Leilani could agree to reduce the list price to the appraised value.

Leilani also has the option to terminate the contract if she does not wish to sell at the lower price. However, one option that is not feasible would be for Jacob to force the lender to increase the loan-to-value ratio to cover the gap. This is not a decision Jacob can enforce; rather, it is at the discretion of the lender based on their lending policies. Option b