Whether you are or buying or selling a home, an appraisal is an important part of the transaction for you. So what happens if the appraisal comes in low?
There are basically three things that can happen:
1. You can challenge the appraisal. Reach out to the lender and tell them that you think it’s inaccurate or that they’ve missed something important. If the lender allows a challenge, you can give them some data or information that shows that the home’s value is higher than what they’ve deemed it to be.
2.Negotiation. If the difference between the asking price and the appraisal is $10,000, for example, the buyer and seller can negotiate that difference. There will typically be a more aggressive negotiation from the seller than the buyer. If the seller agrees to come down $7,000, the buyer will need to come up with an additional $3,000 to make up the difference. There are plenty of options for this. The seller could come down the full $10,000 or the buyer could come up and cover the full $10,000 in cash. It depends on the motivations of the buyer and seller and the market conditions, among other things.
3. The deal dies. You basically just cancel the deal if the buyer and seller can’t come to terms in the negotiation.
Hopefully this situation doesn’t happen to you as a buyer or seller, but I hope this topic was helpful for you. If you have a low appraisal, always consult your real estate advisor for help to work through it the best way possible.
If you have any questions for me about appraisals or you’re thinking about buying or selling a home in Milford, give me a call or send me an email. I’d love to hear from you.