Last week, we demystified the near-final step in buying or selling a home: the dreaded appraisal. If all goes according to plan, the appraisal goes off without a hitch and it’s closing time, baby!
But sometimes – often, if we’re being honest – hitches happen.
And really, when you’re looking to buy or sell a home, hitches should be expected since rarely does anything go exactly according to plan. So what can you do when the appraisal comes in below the price you and the buyer have agreed upon?
First? Take a deep breath. You’re still in the running to completing the deal and reaching the closing table. Second? Remind yourself that a low appraisal won’t necessarily kill your deal. Having an experienced agent at your side can make all the difference as you attempt these six things you can do to combat a low appraisal.
6 Way To Handle A Low Appraisal
- Lower Price To Appraisal Price
The seller can agree to sell the house at the appraised value – though it’s a tough pill for them to swallow. But if the home was overpriced or the value was inflated, often this is the best solution.
- Pay For An Independent Appraisal
It will cost you as you’re not only paying for the first appraisal in your closing costs, but you’ll have to pay for the additional appraisals as well. On occasion, however, real estate agents or sellers may offer to foot the bill, too.
- Cover The Difference In Cash
The lender cares about the appraisal only as it affects the loan-to-value ratio so sometimes, the buyer’s lender will allow the buyer to pay cash to cover the difference.
- Split The Difference
If both parties still want the sale to go through, an equitable option is to split the difference, with the seller dropping the price a bit and the buyer adding cash to the down payment.
- The Seller Can Carry A Second Mortgage To Cover The Difference
If the buyer really wants the home but can’t cover the difference in cash, making payments at a later date to the seller is an option with a second mortgage.
- Challenge The Appraisal
This option is a bit of a hail mary since it’s very unlikely to work – but it’s still an option. The lender can request a review of the appraisal, and the buyer can request a review or a second appraisal.
While none of these options are guaranteed to work, they are still exceptionally viable options and more often than not, we’ve seen buyers and sellers work together to make the deal work. After all, sellers want to sell and buyers want to buy, right? A low appraisal just keeps things interesting for everyone – and keeps us all on our toes.
At DeLeon Sheffield, our seasoned real estate professionals have seen, experienced and survived it all – and a low appraisal is par for course in the landscape of real estate deals. We’re committed to seeing every deal through – every time – so everyone walks away happy.
Because at DeLeon Sheffield Company, ‘We’re More Than Realty; We’re Family.’
