Understanding conditional offers
For example, let’s say an agreement is signed for $300,000 for a home and the buyer is approved for financing of $225,000, which is 75 per cent of the value of the home. If the bank’s own appraiser actually values the same property at only $275,000, then the bank in most cases will not lend you the full $225,000. They may only lend 75 per cent of $275,000, or $206,250, and then expect the buyer to come up with the difference of $18,750. This can occur perhaps just before closing, making it extremely difficult for the buyer to come up with the extra funds in time.