What can you do if the home you’re buying, or selling, doesn’t appraise?
You’ve done all the research, shopped until you dropped, found the home you want to put an offer on, written a contract and after some back and forth have an accepted contract… everything is right on track. Until the appraisal. Now the home you are buying, or selling, has not appraised for the agreed upon sales price. What options do you have?
1) Examine the appraisal very carefully. Look for errors in square footage, number of rooms or land size. Make sure the appraiser is both a local expert and did more then just a drive-by. Also, check to make sure your property isn’t being compared to foreclosures or short sales as these will unfairly drive your value down.
2) Ask your agent to help. If there are no obvious errors in the appraisal, have your agent submit some other properties to the underwriter for consideration. This can include properties the appraiser overlooked and even pending sales that your agent can call and find the agreed upon sales price. These are the most current comparables and many agents will share those numbers with your agent willingly.
3) Ask for another appraisal. Not all appraisers are as qualified (or as good) as the others. You may have just gotten a bad appraisal.
4) Re-negotiate the price. The bank will not lend over the appraisal amount but the buyer can make up the difference in cash or possibly even a secondary note to the seller. Many buyers will not pay over the appraised value (why should they pay more then the home is worth?) but if they have the ability to and love the home they may not care what an appraiser feels the value is. After all, they made the offer to begin with so felt the home was worth that value themselves. If they cannot or will not meet the full asking price maybe you can meet in the middle.
5) Drop the price to the appraised value. If you want to keep your sale from collapsing you may have to drop the price to the appraised value. It may be worth dropping the price now to losing a ready and able buyer in the hopes that you will find another one down the line willing to pay more then the appraised value.
6) Cancel the contract. Most contracts allow the parties to walk away if the appraised value is lower then the contracted sales price with no fault (i.e. the buyer gets all monies returned minus any actual costs incurred up til this point (appraisal, home inspection etc). If you cannot get the appraisal adjusted, redone or renegotiate the price then it may be time to call it a day.
I hope these tips have been helpful. If I can be of any more assistance please don’t hesitate to ask. Let me show you why Cathy Pierce is A House-SOLD Name!