My Appraisal Came in Low, Now What?

Whether you are buying or selling a home, the appraisal matters. Even when the buyer and seller have agreed on a price, the deal could fall apart if the appraisal comes in low.

In a sellers’ market when there are plenty of qualified buyers, multiple offer situations can drive up the purchase price higher than the sale price of the comparable properties.
In a buyers’ market, there are more properties on the market and there are fewer buyers purchasing, so values will be soft or falling.

Either way, the appraisal can be cause for concern.

There are several other reasons that an appraisal can come in low.  There could be an abundance of foreclosure or short sales that would drive values down. The appraiser could be from outside the area and not have local market knowledge, or they could be inexperienced.  Or the seller could have overpriced the property in the first place.

So your appraisal came in low, well here is what you can do. First, don’t panic because there are options so that the deal will not fall through. The buyer can make up the difference in cash by adding to the down payment to reach the agreed upon purchase price. If you are the seller, you could have a pre-sale appraisal completed when you list the property for sale.

The seller could lower the sales price to meet the appraised value. The buyer or the seller could order and pay for a second appraisal. You could ask the listing agent or buyers agent to provide a list of comparable properties that do support the value, and ask the underwriter to re-evaluate the appraisal. There is always the chance that they will consider new or overlooked information.

The deal doesn’t have to fall apart, but some do. If you remember that most problems are correctable
and address the problems one at a time, you should be able to work through them and get the deal to closing. If you have any questions on appraisals, feel free to call me directly at 215-519-1399.