If it is a hot market area you will have to cover the difference or walk away. Not hot market try to negotiate.

Depending on where the gas pipe is it may be a gas company replacement. If the pipe is between the meter and the house it is on the homeowner in this area. Leading to the meter the old gas company wanted to handle it. For that you would have to contact the gas company.

If the appraisal came in under the asking price they are going to have a hard time finding another buyer unless it is a cash sale or they put down a larger down payment to make up the difference. Banks do not lend out the extra money on homes priced higher than the appraisal.

Way too many problems to deal with. Your realtor is not your friend and does not have your best interest in mind. He/she wants to make a sale. Walk away from this money pit.

When an appraisal comes in below the sales contract price, then there are options: buyer brings in the cash to closing over the appraised value (since the loan LTV will be based on the appraised amount), the seller agrees to reduce the sales price to the appraised value or the buyer and seller negotiate an acceptable amount BETWEEN the appraised value and the contract price OR the buyer cancels the purchase.

This home does sound like it needs lots of work with a very old roof (21 years), foundation problems, and termites. These are expensive repairs. Do you have the funds to get this work done? Does this home have any redeeming features that weren't mentioned in your OP?

Lets go through some of the list.

Gas pipe is black pipe and is often corroded looking. But, it's perfectly serviceable. Have a plumber, not a home inspector, look at this to settle your mind. Somewhere in the inspection report is a notation that a specialized professional should examine it.

I'm surprised that the bank will lend on a 21 year old roof. The roof is shot and will most likely need replacing immediately. I would negotiate for a reduction in price based on the cost of a new roof. Otherwise, walk. There may be damage that is not apparent unless the current roofing is removed.

A sunken driveway is a very expensive fix. It can indicate a number of drainage issues. You had better negotiate a concession for this. Get a contractor out to assess the potential cost.

How old are the mechanicals? Meaning HVAC mechanical systems. A house 21 years young will most likely need replacement units. That's a lot of money. Get an HVAC guy out to make a specialized professional assessment. This can save you big bucks. Ask me how I know.

All of your toilets will need to be rebuilt. The rubber in the tanks degrades. Your fixtures are probably past their prime. That's money out of your pocket unless you are handy. I bet it's not in the report. Things like that never are. How old are the kitchen appliances. If they are the same age as the house, they are at the end of their useful life. Plan on replacement in the near future.

Make the homeowner tear out the infestation damage and fix it. Once the affected area is open, you should negotiate for your contractor to examine the situation prior to repair. Once the full extent of the damage is revealed, examined and treated, have the owners fully repair the area. I've been through this scenario personally and that's what we did. It's a good thing, too. Extra damage was revealed and it came out of their pocket, not mine.

Denita has provided you with good advice as far as how to deal with an appraisal that is under the contracted price. It gives you a lot of ammunition to renegotiate or walk.

If you believe that the house is a money pit, this is your opportunity to get out of the sale without complication. I've done that. You've spent money on an inspection and an appraisal, it will just get more expensive from this point forward.

As a retired appraiser and the owner of many homes, all of these issues can be dealt with, but don't ever fall in love with a property. It's not a good idea and it will cost money, time and heartache. It's a business transaction. Treat it that way. Good luck.

Maifleur03, It’s a hot market here, especially for ranches, with 5-7 offers per home and most homes are selling within 24 hours. Denita, I sold my house this summer and am not putting all the proceeds into the down payment so I have money for repairs thank goodness. The roof is in good shape other than 3 or 4 shingles and doesn’t show it’s ever leaked per the inspector. Homechef59 that’s a good idea to get a plumber’s opinion on the pipe, I wouldn’t have thought of it; you never know what the utility company will say. The realtor today said she thinks it’s about $500 per foundation crack and it comes with a 10-15 year warranty – wish she’d said that when we looked over the inspection. From my research that’s the price for a medium crack; it could be as low as $200 or as high as $1,000.

The realtor and I talked this morning and I told her about the appraisal. She’s the one who suggested we lower the price to the appraised value and also reduce by their $3,500 to fix everything, I’m glad we thought similar. The lower price will pretty much pay for the roof. It’s been submitted so now I wait. It has issues that came to light in the inspection, but it really is a nice house in a good neighborhood and overall it’s been cared for. Plus, it’s 10 minutes from family.

I have some uncertainty still about moving forward with the purchase but there’s other things in play. I retired in January, sold my house in June, moved somewhat closer to family in July, couldn’t find anything to buy so I’m in an apartment for the first time in 25 years. I planned on waiting till the spring to start house hunting but can’t stand it here anymore. The family above me, really the woman, stomps across the floor, pounds her feet in place, jumps on the floor – a 15 minute continuous jumping temper tantum 2 weeks ago. Management is ineffectual. Last night and Saturday night I don’t know if the 2am noise was jumping on the floor or slamming a door but the lack of sleep is wearing me down too. I just need out of here.

Thank you so much for the helpful information and feedback. I truly appreciate it.

If you are renting unless it is a month to month you will also need to factor in the cost to get out of it.

As far as foundation cracks it would depend on the type, size, and where located as to how much it would cost. Just saying that there are cracks means little. Almost all foundations will develop cracks but unless this is "the" house for you keep looking.

@Kate Mondo - sounds like you have addressed the issues. I agree with bringing in a specialist for each of the major items. In my area you can't even get homeowners insurance on a (shingle) roof 20 years old or older, even if the roof is in good shape. Speak to your insurance agent to find out if that would be an issue in your area. I'm in S Fl where homeowners insurance is expensive anyway.

My insurance company will insure, but will require replacement within 90 days to continue to insure. So, you will have to get on top of that. A phone call to the insurance agent for information would be a good idea.

Who would ever share the inspection results with a home insurer?

You said you negotiated $3500? Not nearly enough. A new roof depending where you are and how big a roof could be anywhere from $8,000-$20,000.

Termite damage can be several thousand dollars and a sinking driveway?The roof is in good shape other than 3 or 4 shingles and doesn’t show it’s ever leaked per the inspector.

Doesn't matter if it looks good. At 20 years, it's past its prime.

Was your offer contingent on inspections and financing? Usually they are which means that if the sellers don't agree to the repairs from the inspection or you can't get financing because the appraisal is too low, you can walk away and get your earnest money back.

From where I sit, though, you made them an offer already knowing the roof needs replacing and that the mechanicals are older. The sellers accepted your offer. To try to use those things as leverage to get money off is quite disingenuous and also reason for the sellers to void the contract. You just have to decide how much you really want the house and make a decision on how to proceed knowing full well that if you push too far and ask for too much, you might lose it.

I didn’t read everything real carefully, but this is what I think I read: you made an offer. They accepted your offer. But, now when you saw the appraisal, you want to say, “No, wait a minute! I changed my mind!”

That‘s not how it works.

That's exactly how one scenario could work.

I didn’t read everything real carefully,
but this is what I think I read: you made an offer. They accepted
your offer. But, now when you saw the appraisal, you want to say, “No,
wait a minute! I changed my mind!” That‘s not how it works.

If the OP's real estate agent is doing his/her job, the sales contract should include a contingency that the house appraises for the price agreed on.

Appraisals are good for 6 months in my state. I assume it is the same elsewhere. My sister just ran into this problem. She was selling and the appraisal came in $20K below the purchase price. The buyer wanted to lower the price and my sister didn't want to go back on the market because that appraisal would be the first thing a new buyer would see. She was lucky that they buyer really wanted her home and they split the difference.

So no, it is not just the buyers problem.

@aziline - an FHA appraisal is good for 120 days (used to be 6 months) and the value stays with the property for that entire 120 days. How does another lender know about the value on a failed closing? Because there is an FHA case number issued to the property at the beginning and appraisals have the case number included. This is a Federal requirement, not state by state and only applies to FHA financing, not conventional. So, if the FHA buyer cancels the purchase and you get a conventional buyer thereafter, it has zero effect.

However, if the appraisal is for a conventional loan the appraisal doesn't stay with the property at all. Someone can come along immediately and have another appraisal completed with a completely different value result.

@Stax - it's not that an individual buyer would share the inspection report or results with the insurance co but that the insurance co requires roof age in order to insure the property. (If the property is financed insurance is required before funding the mortgage loan.)

That roof (and other) information is also independently confirmed (through Realtors and reroofing permits) before the policy is quoted or issued. Plus the insurance co takes photos of the property after closing and won't hesitate to cancel the policy if the roof is discovered to be unsuitable/past it's useful life as determined by the insurance co. You can't sneak an old roof through an insurance co without some severe consequences.