FAQ's: Step 8 to Finding Your Home: The Appraisal

Real Estate Agent with RLAH Real Estate AB95346

If you plan to get a mortgage to buy your home, your lender will insist upon an appraisal to ensure that your home is worth what you are paying for it.  This is not a form of consumer protection to make sure you are not paying too much, but an effort to protect the bank's interests. The lender usually puts a lot more money into the home that the buyer does!

Most of the time, my clients have appraisals at or even a bit higher than the sales price.  But every once in a while, one comes in at a number lower than the contract price. 

And then it all hits the fan.

First, the other agent and I look at the appraisal itself.  If there are obvious mistakes that have lowered the price, we can ask the lender to appeal the results to the appraiser.  Sometimes that works, ans sometimes it does not.

For a buyer, a low appraisal isn't the end of the world.  There will be a lot of pressure on the sellers to lower the price to the appraised value - not a bad thing if you are buying.  If they do not, you can walk away from the contract with your earnest money deposit. 

But if you don't want to walk away?

If the sellers won't lower their price, you may have to increase the amount of your down payment in order to complete the transaction. 

A few months ago, I had a transaction where the appraisal was low, and the seller refused to lower his price by a few thousand dollars to make the deal work.  The buyers felt all along that they might be overpaying for the house, so they decided to move on.

But it had a happy ending, though not for the seller .  The buyers just settled on another home, and the stubborn seller's house is still on the market unsold. 

The good news is that once the appraisal is successfully completed, there isn't a whole lot more that can go wrong.  Or can it?

Stay tuned for #9!


If you are planning a move to or from the Washington, DC area, I can help!  I am licensed in the District of Columbia, Maryland and Virginia.  You may call, email or text me at: 

Housepat@mac.com, 202-549-5167





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Captain Wayne - Rowlett Real Estate School
REcampus Fully Accredited Florida ONLINE & Classroom Training in Destin, Pensacola Florida - Panama City Beach, FL
Rowlett Real Estate School / Owner and Instructor

You never know what will take place at the last minute.  I'm glad your buyers settled on another house.

Jun 04, 2012 11:51 AM #1
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

I've had buyers walk, change lenders to get a new appraisal and pay the difference out of pocket when the seller had a second appraisal done.... never ever had a seller lower the price though.

Jun 04, 2012 12:03 PM #2
Ellen Caruso
Daniel Gale Sotheby's International Realty - Glen Head, NY

My buyers used it as a negotiating tool, but the sellers insisted on their price and the buyers walked!

Jun 04, 2012 12:52 PM #3
William Johnson
RE/MAX Associates - La Jolla, CA
San Diego Real Estate Voice, GRI CRS e-Pro CDPE
Hi Pat, The appraisal issues of a few years ago have mostly disappeared and the process has reverted back to the core of the Appraisal Principles that were set up to help establish an opinion of value. Sellers would be wise to consider that if there are no glaring errors that have caused their value to be lower, they need to take the process more seriously. When I have had significant differences with the seller about value ( granted this a rare occurance) I wouldrecommended an appraisal prior to listing and it can resolve the difference.
Jun 04, 2012 01:15 PM #4
Paula Swayne
Dunnigan, Realtors, Sacramento (916) 425-9715 - Sacramento, CA
Realtor-Land Park, East Sac & Curtis Park -Dunniga

Hi Pat~

I recently was at a seminar where a Realtor shared her solution to the appraisal crap shoot.  She "interviewed" the appraiser when he/she called.  How long have you been appraising; how many homes in this neighborhood have you appraised; where are you from, etc.  If she didn't like the answers, she refused to allow the appraiser access to the house, called the lender and asked for another appraiser.  Interesting, huh?

Paula Swayne

Jun 04, 2012 03:35 PM #5
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC


Informative post on the in and outs of the appraising process.

Good luck and success.

Lou Ludwig

Jun 05, 2012 02:17 AM #6
Steven Cook
No Longer Processing Mortgages. - Tacoma, WA

Patricia -- (et.al.) -- just as a comment in response to Paula (#5).  Although it might not be strickly against the current rules for appraisal assignments, it may be skating on very thin ice, and could be a problem is one were to reject many appraisers.

Jun 05, 2012 04:05 AM #7
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

This is a great explanation of the appraisal process and what can happen if it comes in low.

Jun 05, 2012 05:18 AM #8
Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

Another great post, Pat! I have suggested this for a feature!

Jun 05, 2012 05:41 AM #9
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Patricia Kennedy

Home in the Capital
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