What Do You Do with a Low Appraisal

by Angel Turner 12/01/2019

Photo by Light And Dark Studio via Shutterstock

In a seller’s market, comparable sales and competition can drive up a home’s price. This is especially true in a seller’s market where offers from multiple buyers try to outbid each other. And, while this sounds like a fantastic deal for the seller, a low appraisal can kill the deal.

Many variables affect appraised values. Some of these include artificially inflated prices from seasonal activity, rising market values, foreclosures or short sales among the comparable properties, increased or decreased supply and demand, overlooked pending sales data, mistakes made by or inexperience of the evaluators, etc.

What do you do?

  • The seller can lower the price. While this is the least preferable by home sellers, if it means the deal goes through and if time is of the essence, it’s certainly an option. The seller can offer this in exchange for the buyer paying some of the closing costs.
  • The buyer can increase their down payment. The lender typically cares about loan-to-value, so if the buyer can increase their cash in, you might save the deal.
  • A seller might offer to carry a second, approved mortgage on the difference.
  • Dispute the appraisal or order a new one. The seller can request a copy of the appraisal from the buyer. Then, you or the buyer can contact the lender and dispute the appraisal. Only the lender can require and insist on a new appraisal. Ask your agent to supply a list of recent comparable sales to justify your price and submit it to the buyer’s underwriter for a review.

A well-written contract requires the seller to release back to the buyer any earnest money deposited at the time of the contract. You can then put your home back on the market. As long as the appraisal was not for an FHA loan, you can hope for a better appraisal next time. FHA loans connect appraisals to the property, so any new FHA buyer would end up with the same appraisal as the first buyer.

The best way to avoid this is to follow your professional real estate agent’s advice when setting your home’s price. They follow the market trends, know the neighborhood, and have the pulse of what the market can bear.

About the Author
Author

Angel Turner

As a Realtor® licensed in Georgia, Angel stands behind her commitment to excellence. As a former teacher and leader, Angel combines her passion for helping others and her love of education to give her clients a unique, familial experience. Her business is built on Communication, Education, Determination and Trust, while embodying the ability to cater and adapt to all the needs of her clients.

Angel’s goal is to assist her clients with all their Real Estate needs, as she aims to make each transaction pleasant, educational, and peaceful. Angel realizes every need is different, so she offers an arsenal of resources to accommodate those needs, taking the stress out of what could be a worrisome endeavor. Whether you are looking to buy or sell your home, Angel is motivated to ensure a personalized experience with exceptional service. What makes this so rewarding for her is her passion to be a part of such a personal journey with her clients. She aims to help buyers find the “IT” place, as well as assisting sellers in getting the price they desire. Angel pledges to uniquely serve all your Real Estate needs with excellence - you can count on it!