A recent report released by Wells Fargo reveals that more home purchase transactions handled by the mortgage segment of Wells saw the sales price of the homes re-negotiated and increased between the buyer and seller after the appraisal was done on the property. Wells Fargo eluded that the report findings show that the homebuyers want to buy the properties with less money out-of-pocket, so it is possible that money is passing from the buyer to the seller that is not showing on the HUD-1 statement, which explains the re-negotiated sales price agreements.
This thought process has forced Wells Fargo to reevaluate and re-establish the way they do business. Wells Fargo announced that as of January 25, 2010, it will no longer allow buyers and sellers to re-negotiate an increased sales price and provide a new purchase agreement, after the appraisal is done.
If the appraised value of the home is higher than the sales price on the contract and the new purchase agreement or an addendum to the sales contract is dated for after the appraisal is received by the lender, Wells Fargo will no longer accept the change to the purchase agreement with an increase in sales price. If, however, the purchase agreement is re-negotiated before the appraisal comes in then the amount of the mortgage is based on the original purchase price or the appraised value of the property, whichever of the two values is lower.