One of the worst surprises you can get when selling your home is a low appraisal.
At this point, you’ve accepted an offer, been through inspections and are planning your move. Then a monkey wrench gets thrown in the mix when the buyer finds out that the bank assigned appraiser doesn’t think the house is worth the negotiated sales price.
What are your options when the appraisal comes in low?
Cry and yell. It might make you feel better, but after that’s over, you’ll need a real plan.
Have your agent provide additional comparable sales to the appraiser in the hopes that they will be considered and result in an adjusted value that at least matches the purchase price.
Have the buyer pay the difference between the contract price and appraised value. Depending on where your home is located, this may be a viable option. I’ve seen more buyers pay over the appraised value for a house in the last couple of years than I have in my entire real estate career. However, remember that if it’s not the norm in your neighborhood, you may meet with a buyer that refuses to do this.
Cancel the sale and go back on the market, keeping in mind your costs for holding and maintaining the house for another marketing period. Be sure you aren’t stepping over dollars to pick up pennies.
Reduce the sales price to the appraised value. This is the most common (and common sense) solution unless you are in an area of rapidly increasing values. Will this price reduction cause you financial hardship? Then it might be time to remove your house from the market and settle back in until prices change.
How to avoid a low appraisal
Hire an experienced agent that will help you price your home right for today’s market and keep you informed about changes during the time your home is listed.
Have questions? Give us a call at 504-327-5303 and we’ll be happy to help you.