I Got a Low Appraisal. Now What?

Q: My house is under contract but we got a low appraisal. Am I stuck with this low appraisal?

A: Possibly, but you still have options. A low appraisal doesn’t necessarily mean a low sale price.

Appraisals are an extremely important part of the real estate sales process. Their purpose is to determine the fair-market value of real estate so that sellers and buyers make good decisions about pricing. They are NOT, however, the final determinant of price. That part is up to the seller and the buyer.

Appraisals can be challenged

While we rely on appraisers to be objective, they are only human. If the appraisal comes in lower than expected, a good Realtor® should be able to challenge the findings with their own comparables and property information. In most cases you can also ask for a second appraisal. A different appraiser might come up with a different value.

There’s still room for negotiation.

Even if the original appraisal stands, that doesn’t mean you have to lower the price. The seller and the buyer can still come to an agreement where the buyer pays all or part of the difference between the appraised value and the purchase price. Just keep in mind that the buyer won’t be able to finance the difference. They will have to put forward cash.

What if you can’t make a deal?

If the seller and buyer can’t come to an agreement, or if the buyer doesn’t have the cash to pay the difference, the seller may have to accept the appraised value and lower the purchase price. If the seller is unwilling to lower the purchase price, they can always put the house back on the market, however, if the appraisal was done for a VA or FHA loan, it is now set in stone for one year. The only way to get a new appraisal is if the next buyer is paying cash or using a conventional loan.

Get the appraisal done first

In some cases, you can avoid these pitfalls by getting an appraisal done BEFORE you put your house on the market. A great Realtor® will be able to point you in the right direction.

You know the one! Call me today for a list of qualified appraisers in your area!

Got a real estate question you’d like to have answered? Send me your question using this link!

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