Realty ONE Group
Realty ONE Group
Jeff Rochford, Realty ONE GroupPhone: (602) 369-7882
Email: [email protected]

Ways to Deal with a Low Appraisal

by Jeff Rochford 06/21/2020

Photo by Light And Dark Studio via Shutterstock

In a seller’s market, comparable sales and competition can drive up a home’s price. This is especially true in a seller’s market where offers from multiple buyers try to outbid each other. And, while this sounds like a fantastic deal for the seller, a low appraisal can kill the deal.

Many variables affect appraised values. Some of these include artificially inflated prices from seasonal activity, rising market values, foreclosures or short sales among the comparable properties, increased or decreased supply and demand, overlooked pending sales data, mistakes made by or inexperience of the evaluators, etc.

What do you do?

  • The seller can lower the price. While this is the least preferable by home sellers, if it means the deal goes through and if time is of the essence, it’s certainly an option. The seller can offer this in exchange for the buyer paying some of the closing costs.
  • The buyer can increase their down payment. The lender typically cares about loan-to-value, so if the buyer can increase their cash in, you might save the deal.
  • A seller might offer to carry a second, approved mortgage on the difference.
  • Dispute the appraisal or order a new one. The seller can request a copy of the appraisal from the buyer. Then, you or the buyer can contact the lender and dispute the appraisal. Only the lender can require and insist on a new appraisal. Ask your agent to supply a list of recent comparable sales to justify your price and submit it to the buyer’s underwriter for a review.

A well-written contract requires the seller to release back to the buyer any earnest money deposited at the time of the contract. You can then put your home back on the market. As long as the appraisal was not for an FHA loan, you can hope for a better appraisal next time. FHA loans connect appraisals to the property, so any new FHA buyer would end up with the same appraisal as the first buyer.

The best way to avoid this is to follow your professional real estate agent’s advice when setting your home’s price. They follow the market trends, know the neighborhood, and have the pulse of what the market can bear.

About the Author
Author

Jeff Rochford

I am a native Phoenician and with my experience in real estate as well as my intimate knowledge of the local area, I work extensively to help buyers and sellers meet their real estate goals. For buyers, as a Phoenix area native, I have extensive knowledge of the metro Phoenix area from Scottsdale/Carefree in the northeast to Glendale/Peoria in the northwest to Queen Creek in the southeast to Goodyear in the southwest. I will search until I find the property that best fits your lifestyle. I will then help negotiate the best possible deal. I also have extensive experience with buyers who wish to purchase new homes. If you are interested in buying a new home you have the right to be represented by your own agent so don’t miss this opportunity speak to me before visiting the builder’s models. And best of all there is no additional cost to you. For those who have a home to sell, I will work with you to design a marketing plan that works best in this dynamic market. In addition to the traditional ways of marketing your home, I can expose your home on the internet to thousands of buyers. These are buyers from all across the country and around the world that can contact me looking to buy in the Phoenix area. Nothing gives me more joy than helping my clients find and buy that perfect home. I would like to be Your Realtor. If you are looking to buy or sell a home or would just like more information, please call me at (602) 369-7882 or just email me at [email protected] Thanks again for choosing MyPlaceInTheDesert.com ‘For Your Place In The Desert’ for Phoenix real estate.