What to Do If Your Appraisal Comes in Low in the Middle of a Transaction

If a home appraisal comes in lower than the sales price in the middle of a transaction, what should you do? Here are your three options.

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Low appraisals can be a real challenge in our market today. Low appraisals have become more common because our home prices have been appreciating quickly over the past several years and there are fewer and fewer comparable properties. It seems that each sale is higher than the last.  

So what is an appraisal? It’s a price that a willing buyer and seller will settle on. In reality, a home must be sold to three different groups: the buyer’s agents, the buyers themselves, and the mortgage lenders. The brokers help us find the buyers for your properties, the buyers have to feel that the sales price is justified, and the lenders have to agree on the value because they’re the ones putting up most of the money for the house.

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If the appraisal comes in low,
you have three options.

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What happens if your appraisal comes in low in the middle of a transaction? There are three ways to proceed:

1. The buyer can terminate the contract.
2. The buyer can pay the difference in cash. If the buyer wants to move forward with the transaction, they can pay the difference between the appraised amount and the contract price to proceed.
3. The seller and the buyer can negotiate. If the seller and the buyer meet somewhere in the middle, the transaction can continue. If the seller still feels that they are getting the value they want out of their house, they may reduce the price to the appraised price in order to keep the transaction moving.

Because this is such a complicated process, it’s imperative that you have a great agent on your side to help you through the transaction and go to bat for you. We have experienced all of these situations and are here to negotiate on your behalf.

On a side note, with the Thanksgiving holiday upon us, I just wanted to take this opportunity to let all of you know how much I appreciate your support. I’m thankful for the trust that you’ve put in me and my team this past year, and it’s been a privilege sharing these real estate tips with you. For those of you who we’ve had the pleasure to represent in the purchase or sale of a home, we are especially grateful. Have a wonderful Thanksgiving!

If you have any other questions about your options in the event of a low appraisal or any other questions about buying or selling a home in the Palm Springs area, feel free to reach out to me by phone or email. I’d be happy to help you!