Whether you’re buying or selling a home, appraisal will be one of your biggest concerns. What should you do if the appraisal comes up short? Aside from knowing the issues that usually comes up with the appraisal, it will also be very helpful if you’re aware of the options should the needs arise.
Here are some options for both buyers and sellers:
• Walk away. If the appraised value comes in lower than what a buyer is willing to pay, that buyer may want you to lower your price. You can do that, or you can walk away and put the property back on the market with hopes that a new buyer, new lender and new appraiser could yield different results. There is a chance, of course, you’ll end up in the same situation.
• Order a new appraisal. You could request that the buyer change lenders and get a new appraisal or see if their existing lender will order a different appraisal.
• Provide evidence of a higher value. If you think the appraiser made an error in determining the value of your property, you could present evidence to the contrary. That could include past home sales or in a multiple bid situation, other offers.
• Walk away. If your offer was contingent upon the property appraising for the agreed-upon price, you could cancel the contract without penalty. If you really want the house, however, this probably isn’t the best first choice.
• Ask the seller to lower their price. You could try to use the appraisal as leverage to negotiate a lower selling price.
• Ask for a review. You could discuss the problem with your Realtor and lender and see if there’s any type of appraisal review process. As part of any review, you’ll want to provide added information supporting a higher value.