Having an appraisal come in lower than expected can be stressful, but it’s not the end of the world! Overpricing occurs in every market condition for many reasons. An abundance of foreclosures in the neighborhood, an over-inflated asking price, and incorrect pricing by the underwriter can all contribute to this awkward situation. But what should you do when the price comes back below expectations?
You may request a value appeal to have the appraiser review their reasoning for not using the similar sales sent by the lender. There may have been an oversight by the appraiser, especially during the busiest seasons.
You can also coordinate with your lender to arrange a second appraisal. Hopefully, you can receive a higher valuation.
If the home’s price was too high to begin with, it’s usually easiest for all parties involved to simply lower the asking price to reflect the low appraisal.
If the appraisal is lower than expected, the buyer may not qualify for the terms in the loan contingency, making them ineligible for the purchase. As long as the purchase contract has been written carefully by a professional, this will require the seller to return the buyer’s deposit upon cancellation.
Of course, each situation is unique and is best navigated with the help of an experienced lender and realtor. Contact me if you have questions!