California Real Estate Practice Exam

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Mr. Soldier wants to purchase a home on his VA entitlement. The asking price is $100,000. The VA "CRV" came back at $98,750. Which of the following statements is correct?

Buyer can ask seller to reduce purchase price.
Buyer can pay the extra $1,250 in cash and get the $98,750 loan.
Buyer can request the VA to reevaluate the property (ask for re-appraisal), hoping to get the full value.
All of the above.

The correct answer is: Buyer can ask seller to reduce purchase price.

The correct answer is that the buyer can ask the seller to reduce the purchase price. In scenarios where the appraised value of a property, as indicated by the VA Certificate of Reasonable Value (CRV), is lower than the asking price, the buyer has the opportunity to negotiate with the seller to adjust the price to meet the appraisal value. This adjustment helps ensure that the transaction aligns with the financing requirements under the VA loan program, as lenders typically do not finance amounts that exceed the appraised value. While it is true that the buyer could potentially pay the difference in cash (which relates to the second option) or request a re-evaluation of the property (third option), these actions are discretionary and depend on the buyer's situation and preferences. The fundamental right to negotiate the price remains a strong option and is often the preferred first step in these circumstances.