What do you do if your appraisal comes in low in the middle of a transaction? This is a real challenge in our marketplace today. Low appraisals can happen because our market is appreciating very quickly and has been for the last several years, there are fewer comparable properties, and each sale seems to be higher than the last one.
What is the definition of an appraisal? It’s what a willing buyer and a willing seller come to terms on. The reality, though, is that we have to sell the home and its value to three different groups: the brokers in the marketplace, the buyers themselves, and the bank. The brokers help us find the buyer for your home. The buyers need to believe your value is justified. The bank has to believe in the home’s value because they’re the ones putting up the majority of the money.
What happens if you get a low appraisal? There are three ways to proceed: the buyer can terminate the offer, the buyer can pay the difference in cash between the appraised price and the purchase price, or the buyer and seller can negotiate.
In any event, it’s important to have a real estate expert in your corner to manage this process and go to bat for you with the appraisal company or the appraiser. We want to be confident in how we’re positioning your home in the marketplace and know what the best strategy is going forward.
If you have any questions or concerns regarding a particular topic, drop us a line or send us an email and we’d be happy to cover it for you.