The phone rings. It's your lender. Your home appraisal just came in $5,000 below sales price.
What was shaping up to be a smooth home purchase just got rocky. With uncertainty surrounding property values across the USA, a low property appraisal has become more common. So what do you do when such a situation arises that could kill the deal?
First, stay calm. Get in touch with your real estate agent and run through the options. If you made it this far, everyone involved is probably operating in good faith. All parties would like to see the transaction close. Given those assumptions, your options include:
- Dispute the Appraisal
- Talk with your Lender
- Buyer Pays More Down
- Seller and Buyer Negotiate
- Seller Reduces Price
1. Dispute the Appraisal
Talk with your REALTOR®. Is the contract sales price a fair assessment of the property value based on a well-prepared comparable market analysis (CMA)? Disputing the appraisal may sound out of the norm, but to dispute a property appraisal could be reasonable depending on a few key factors:
- Where is the appraiser based? Did they perform an appraisal in a housing market that they may not know well?
- Did the appraiser have adequate information about the subject property? (Perhaps the hardwood floors and the granite counter tops were items of value that the appraiser overlooked.)
- What were the comparable properties that were used in the appraisal? Were the comparable properties fair? Oftentimes, agents involved in the transaction have actual knowledge of the comparable properties, and can assist the appraiser.
After providing an appraiser with a handful of further pertinent comparables, the appraisal can sometimes be adjusted to come in at the contract sales price.
More information: http://www.djtrealestate.com/dealingwithalowappraisal.htm