Some solutions if Your Ann Arbor Home You Are Buying Does Not Appraise?
The first thing to do if the Ann Arbor home you are buying doesn’t appraise is to not panic.
You are excited and have made an offer on a home for sale in Ann Arbor, and now you are in the process of obtaining financing for your new Ann Arbor home. The bank or mortgage broker is going to want an appraisal on your home to guarantee that the home is worth what you are paying.
When we are representing buyers on a the purchase of the home in Ann Arbor, we write into the contract, “the purchase price must meet the appraised value of the home.” (even if you are paying cash.)
In this market, seriously… many homes do not come in at the Purchase price on the contract for Appraised Value.
How does a low appraisal affect you?
If the home does not appraise, then there is room for more negotiation with the sellers.
If the appraisal comes in lower than purchase price, you have some options
1) You can walk away from your Ann Arbor Home, because the appraisal contingency is part of the contract, and if the property does not appraise, that is a contingency that you can use to end the contract.
2) Another option for you would be to renegotiate the purchase price – by offering the sellers to pay the price that the property was appraised at. If you really want the property, that is a consideration. Offer the appraised value to the seller, and see what their response is.
3) You “may” want to consider paying more than purchase price – bring cash to close the deal. This is NOT something that I recommend for my buyers who are purchasing Ann Arbor Real Estate.
Keep in mind, if you are obtaining a loan on your property, then it is imperative that is appraises. Your lender will NOT loan you money to purchase the home if it doesn’t appraise at the agree upon purchase price.
Issues with Ann Arbor Appraisals
One of the biggest issues we have with homes appraising to the purchase price in the Ann Arbor Market Area is that appraisers are being hired by banks that do NOT live in the Ann Arbor area. Not knowing Ann Arbor, the schools, the taxes, (and a variety of other factors unique to the area) they often do not use the right home comparables.
This is not the market to pay over appraised value, and I would advise my clients against this. I would not recommend paying more for the property than it appraises for even "if" you can.
If I can answer any question about Ann Arbor homes for sale, or Ann Arbor real estate, please contact me. 734-926-9707
(originally posted at AnnArborRealEstateTalk.com)