When a Home’s Appraisal Comes in Low
When a home’s appraisal comes in low, you have four options.
If a home’s appraisal comes in below its contracted sale price, one of four things can happen:
1. The buyer makes up the difference in cash. If you’re the seller, this is what you hope will happen.
2. The seller drops the price to meet the appraised value. If you’re the buyer, this is what you hope will happen.
3. The deal falls apart, and the home goes back on the market.
4. A compromise is made through negotiations.
“In the end, a home’s value is based on what the seller is willing to sell it for and what the buyer is willing to pay for it.”
Let’s take a moment to talk about the fourth option and how our team resolves low-appraisal situations. We try to avoid low-appraisal situations before they happen, but if we notice an error in an appraisal, we’ll bring that to the attention of the appraiser and see if they’ll revise it. Occasionally, buyers are willing to change lenders to get a fresh appraisal (bad appraisals do happen!).
The reality is that the market sometimes demands that buyers pay more for houses than what their appraisals will support. In the end, a home’s value is based on what the seller is willing to sell it for and what the buyer is willing to pay for it. That’s truly the definition of a home’s value. In multiple-offer situations, buyers will oftentimes tell sellers they’re willing to pay a certain amount over an appraisal should it come in low.
Here at the Tampa Home Group, we deal with these types of situations every day, and we have a way of negotiating them so that both parties go home happy. If you have questions about this or any other real estate topic, don’t hesitate to reach out to us. We’d love to help you.