Don’t Let a Low Appraisal Jeopardize Your Deal

Whether you’re buying or selling a house, it’s likely that you have a mortgage, and if the appraisal for that house comes in low, it can jeopardize the deal. That’s why it’s important to know the basics concerning appraisals.

Basically, an appraisal is the bank’s way of ensuring their investment is covered. They don’t want to lend money on a house that’s underpriced. A certified, professional appraiser comes out to the house, checks its size and condition, and compares it to three other homes in the surrounding area that have sold in the past six months. The process is a mix of art and science, and the inspector adds their own personal taste to it.

How can you prevent a low appraisal? If you’re a seller, price the house appropriately. Also, appraisers are usually very busy, so make sure they have easy access to your home. First impressions are important as well, so make sure the front yard and/or walkway leading up to the front door are clean. It wouldn’t hurt to give the home a deep cleaning either. Finally, try providing the appraiser with your own comps so they know where you’re coming from and everyone’s on the same page.

What if the appraisal does come in low? First, check to see whether any errors were made. Then, check to see whether there were any errors in the MLS information that was used. You could also challenge the appraisal by replacing one comp with another, which might adjust the price upward. Lastly, you can just get a whole new appraisal. You’d have to pay for it, but a different appraiser might calculate a different value.

If these things don’t work, try negotiating. You could lower the price of the house, the buyer could pay extra cash above their loan’s value, or you could meet somewhere in the middle.

Worst-case scenario, the buyer moves on with their home search and the seller has to find a new one. If you prepare ahead of time and follow these tips, though, you won’t find yourself in that situation.

As always, if you have questions about this or any real estate topic or are thinking of buying or selling a home soon, don’t hesitate to reach out to me. I’m happy to help.