Low appraisals can happen in all types of housing markets. So what can you do if you’re appraisal comes in low? Well, first of all, try to remain calm! You do have a couple options.
When financing a home, the lender requires an appraisal be done on the property in order to justify the amount of money that is being loaned. Basically the bank wants to know that the price of the home is valid before is loans the money for purchase. It’s done to protect both the buyer and the lender.
Now, there are a number of reasons an appraisal could come in low. But the important thing to know is that in this situation the seller has some options in order to save the deal.
- Option #1 Supplying A List of Comparable Sales
You can ask the agents involved to put together a list of recent comparable sales that would defend the agreed-to sales price. Once your list is compiled, you would submit it to the underwriter or lender and ask for a review of the appraisal.
- Option #2 Ordering a Second Appraisal
This can be a little more of dicey depending on the type of loan the buyers are requesting, but in most cases either the buyer or the seller can order a second appraisal. Sometimes the second appraisal will come in higher than the first, especially if the first appraiser was inexperienced or made mistakes. So it’s worth discussing with your lender to find out if this is an option for you.
- Option #3 Renegotiating with the Buyer
If the appraisal just isn’t going to budge, then each party might need to make concessions. If you’re the buyer, you could push that the home be sold for less money.
If you’re the seller, you could try to reduce some closing costs or ask the buyer bring in more money to make up the difference.
Throughout the transaction keep in mind you and your buyer ultimately want the same thing. Even if the road to closing gets a little bumpy, we’ve found that most things can be worked through when the facts are clearly communicated and both parties are willing to negotiate.
If you have additional questions regarding buying or selling a home, contact one of our BHURDinUtah agents today. We’re happy to share our knowledge of real estate with you and help you on your path to homeownership.