Frequently Asked Question: What can I do if my home doesn’t appraise?
If you are selling a home and your home does not appraise for the contract price you have the following options:
- Bite the bullet and accept the reduced selling price and adjust the sales agreement to reflect the new value.
- If the buyer is still willing to purchase the property at a price above appraisal and has the cash to make up the difference (for either the entire difference or a newly renegotiated price), you are in luck provided the lender will approve the additional cash funds for the purchase.
- If you or your Realtor feels that the appraisal is incorrect, there is the possibility of contesting the appraisal. In order to have any chance of success, you will need to look over the appraisal very carefully and find one or more errors. These must be objective errors such as square footage, dates, features, etc. and not subjective errors such as adjustments for age, condition, etc. Make a detailed list of the errors and send a written and/emailed detail of the issues with the appraisal to the lender or appraiser and respectfully request a review.
- If as above you feel the appraisal is in error but you can’t find any errors, you have the option to hire your own appraiser and get a second opinion. Should this appraisal come out in your favor and above the value of the first appraisal there is the possibility that the lender may agree, but in most cases, you will need to get together with the lender and choose a third appraiser (that both parties agree to) for the final tie breaker.
- And, of course, your last option if the buyer is not willing to purchase at above appraised value and you are not willing to lower the price is to cancel the agreement and all deposits will be returned to the buyer and you are free to continue to attempt to sell your property.
If you are the buyer, you have the option of asking the seller to reduce the price of the property to the appraised value. If the seller is unwilling to do this, you can walk away from the contract and have all of your escrow deposits returned (provided you are within all other timelines in the contract) or agree to pay more for the property by bringing extra cash to the table as the lender will not loan above the appraised value. You may be able to re-negotiate a price somewhere in-between the contract price and the appraised value which will feel more like a win-win situation for all involved parties.
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