ANNOUNCER: I’m with Julien Luckasavitch from Cohen Highley. Julien, can my new construction home be appraised for less than I agreed to pay in my purchase agreement?
JULIEN: Yes. If the real estate market declines, housing prices may fall and the appraised value of your home may be less than what you agreed to pay for it.
ANNOUNCER: Will this have an impact on obtaining financing?
JULIEN: Banks won’t lend more than 75 to 80% of the appraised value of your home unless the loan is CMHC insured. If the appraised value drops below the price you agreed to pay, you’ll need to come up with a larger down payment. If you can’t, the builder could terminate the agreement, keep your deposits, and potentially bring a lawsuit against you.
ANNOUNCER: How can I protect myself from this?
JULIEN: Insist on a financing condition in your offer stating if you’re unable to secure sufficient financing prior to closing, you can terminate the agreement.
