What happens when a certificate of reasonable value (CRV) issued for a VA loan is less than the purchase offer?

When a certificate of reasonable value (CRV) issued for a VA loan is less than the purchase offer, the buyer has the option to withdraw from the transaction or negotiate a lower price with the seller. This situation arises because the CRV establishes the maximum value the VA is willing to insure based on the property’s appraised value. If the CRV is lower than what the buyer originally offered, it casts doubt on the property's fair market value at the offered price, making the purchase less viable from a lending perspective.

By choosing to negotiate a lower price, the buyer can align the transaction with the appraised value, potentially making it easier to secure the necessary financing. This negotiation also allows the buyer to maintain good standing with the seller while seeking a resolution that meets both parties' interests. Thus, the buyer has some flexibility in how to proceed after receiving the CRV, which is key in the context of VA loan transactions.