Here’s what happens when an appraisal comes in below the purchase price.
A lot of homebuyers think that the agreed-upon purchase price is the sale price no matter what. However, there’s a third party that has to verify the home’s value.
The appraiser is the one who determines the home’s value for the lender who is loaning the buyer money. They use comparable sales to help determine a home’s value. If the comparables come back lower than the purchase price, the appraiser will deem the appraisal low.
A couple of different things can happen at this point. A listing agent has an opportunity to provide comps to the lender that they haven’t already seen. They can also complete a pricing grid. All of this is to make sure we’re getting the right estimation of value.
“Appraisers use comparable sales to help determine a home’s value.”
If the appraisal still comes in low, the next step is to negotiate with the buyer. The appraisal must come in at a certain price, or the lender will not fund the loan. Some buyers in today’s market are writing clauses that promise they will pay above the appraised value in cash to secure a home.
If you have questions about your home’s appraised value, low appraisal options, or anything else related to real estate, don’t hesitate to reach out via phone or email. We look forward to hearing from you soon.
