Monday, September 5, 2016

What to do if an Appraisal Comes in too Low

With the way DFW prices are on the rise, and the high demand vs little supply, it is not uncommon for appraisals to come in low. What you should do if an appraisal comes in too low depends on the side of the transaction you are on. Luckily, a competent agent on either side will be an asset to help remedy the situation.

On the selling side: If you are selling a home and the appraisal comes in lower than the accepted price, your agent is the best one to consult. They should be able to pull recent comparable sales and compare them to the appraisal. If the appraisal is lower than the prices of the comparable sales, your agent should be able to dispute the value using valid recent neighborhood comps. If the recent comps support the value of the appraisal however, you must either work something out with the buyer, or lose the contract and risk putting the home back on the market and return the earnest money to the buyer upon termination.

On the buying side: If you are purchasing a home and the appraisal comes in lower than the accepted  price, you have a few options. The first, you can choose to walk away from the deal and invest your money in a different home. Some people also will pay the difference out of pocket up to a certain amount, You can also try to negotiate with the seller to see if they will come down on the price to meet the appraisal or meet you at some point in between the appraisal and accepted offer price. The good news for you is if the seller does not want to negotiate you should have a clause in your contract allowing you to terminate the contract and still keep your earnest money. Your agent is the best one to speak with about this situation and they can go over in detail with you about the neighborhood, realistic market prices, availability, contract termination, and more.