Home Appraisal is low: What next?

Home Appraisal is low: What next?

So, your appraisal is low while the home is pending sale. It can be a bit of a cloud over your otherwise flawless property closing. The fall out can be massive because a low appraisal can result in breaking the appraisal contingency or causing the bank to decline your mortgage. In either scenario, your deal falls through. However, this doesn’t necessarily spell death for your transaction.

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How often do Appraisals come in Low?

low appraisal

In normal markets, low appraisals were said to occur less than 8% of the time. Obviously, in hot markets like the one we’re in, that number has sky-rocketed. That’s why so many home sales are falling through and also why there’s been a meteoric rise in the amount of Private Mortgage Insurance (PMI) policies given due to lack of equity in the home at closing.

Why are Appraisals coming in Low?

Pros & Cons of Working with The Residential Buyer

We’ll buy your home as-is, without the hassle of going through the appraisal process.

Appraisals can turn sideways if:

  1. The area is experiencing a seller’s market, where the real estate market is hot and homes still go for figures higher than the appraised value.
  2. The local market has begun to decline, and homeowners priced their homes with old market information; this can also happen if the home has been on the market for a while without the homeowner adjusting the price to match the currently declining market.
  3. There has been an increase in foreclosure and distressed properties in the area.
  4. The appraiser was unfamiliar with the area and the local market.

What can I do if my Appraisal is Low?

appraisal is low

Good news for you is that if appraisals come in low, you can make changes to your home or speak with another appraiser. Basically, go get the appraisal re-ordered. If done properly, you can take speedy action to increase the results on your home appraisal.

Here’s some things you can do if your appraisal came in low:

  1. The SELLER may also choose to remove the home from the market, if the appraisal caused the deal to fall through, and relist when the markets are more favourable.
  2. The BUYER can also choose to exercise the appraisal contingency, if one was originally placed as a clause in the contract; the seller may then consider a back-up offer. Obviously, this is bad news overall but now the buyer can go entertain other offers. 
  3. Both parties can meet halfway, and split the difference. That is, the seller would drop the price of the home and the buyer would put more money into the downpayment with both parties meeting halfway.
  4. Seller financing can become an option; the seller carry back a note for the amount over the appraisal and the buyer would pay it back in smaller installments over an agreed upon time period. This would typically be listed as a second position lien on the property.
  5. Both parties can agree to have a second appraisal done, if they believe that the appraisal was incorrectly done in any way. The buyer usually pays the appraisal costs, but both parties can agree to split the second bill.
  6. Lastly, is that the seller can put some work into the home to increase it’s value so that the bank will approve the mortgage.

We'll bypass the appraisal process!

We’ll BUY YOUR HOME FOR TOP DOLLAR without the worry of a low appraisal.

How can I Avoid The Appraisal Process?

You can avoid this process by selling to an all cash buyer or other types of property investors that don’t require or want an appraisal contingency.

The Residential Buyer is that all cash buyer, in North & South Carolina. We’ll buy your home for top dollar, on terms or all cash, without the worry of a low appraisal ruining the deal.

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