Here’s how things usually play out when the appraisal comes in low.
As you likely already know, we’re facilitating a lot of multiple-offer situations for our sellers right now. It’s important to remember, however, that price is an opinion—my price is an opinion, and so is the buyer’s price, the seller’s price, and even the appraiser’s price. Pricing is an art, not a science. So what happens when the appraisal comes in low?
Typically, most consumers will have a built-in appraisal contingency, so there’s really just three things that buyers and sellers can do with a low appraisal:
Option No. 1: Meet in the middle. The most common approach is to renegotiate to see if you can meet somewhere between the contract price and where the appraisal came in at.
Option No. 2: Bring the difference in cash. The buyer’s lender will only loan on the appraised value, so if the appraisal comes in, say, $10,000 lower, the buyer can decide to fill the gap themselves. As a seller, you’re more likely to see this if there are multiple buyers competing for your property.
Pricing is an art, not a science.
Option No. 3: Cancellation. You as the buyer always have the right to cancel the contract if you’re not willing to match the difference.
So, what do we do as real estate professionals to make sure that the appraisal comes in at value? Well, here’s one of the biggest benefits of working with a solid listing agent: They’ll be able to have a conversation with the appraiser to convey why you, the seller, received the offer you did and justify it with recent sales data and other important info. They’ll make a case for any improvements you’ve made to the home and point out the number of showings you had, the lack of days your home spent on the market, etc.
If you have questions about preparing for the appraisal, or have any other real estate-related needs, don’t hesitate to reach out via phone or email. We’re always here to help.