What if the Appraisal Comes in Lower than the Contract Price?
You have an accepted offer in on a house for $600,000. You have put down 25%. The appraisal comes in at $580,000.
What do you do?
- First, you do not have to pay more than the house is worth, unless your would like to. Meaning you don’t want to risk losing it. Of course this means you would have to come up with $20,000 out of pocket.
- You can walk away from the deal since the Contract DOES make execution contingent upon the house appraising at the value of the offer or above – not below.
- You can present an addendum to the Purchase Contract to the Seller, stating that you both agree to an adjusted sales price of $580,000 to reflect the current market value. *All other terms & conditions remain the same.
- You can compromise with the seller – quite often, especially of late, buyers and sellers are meeting in the middle of the difference in the appraised value.
- You can also ‘try’ to have the appraiser correct the appraisal. During the recession, I had a 90% success rate at getting these changes. NOW, it’s a whole new ballgame; the appraisers are over-worked and are not paid to go back and make changes. I’ve seen appraisers turn down making changes when the appraisal comparables used were blatantly erroneous. We do still try but, when the appraisal comes in low, I immediately discuss a Plan-B with my buyers (and sellers when it happens on that side of the transaction).
If you back out, the Seller is likely going to have to accept an offer at $580,000 or less, because the house will probably appraise at that same price or near that price, and no one else is going to want to pay more that the home is worth. However, I’ve seen buyers change lenders, get a new appraisal management company and the appraisers with the new company have no issue getting the home to appraise.
$20,000 is significant income for the average person. Would you compromise your income for any other reason?
Today’s market is in a strong appreciation mode, but most buyers are not willing to pay more than the property is worth. Reaching a compromise is the most common resolution to this issue but, know that you do have options.
REMEMBER: More often than not, the sellers are READY to Close on their home. This is something the Listing Agent is well aware of and an agent worth their salt is going to have that talk with his/her Seller.
If you’re thinking of buying a home in the Charlotte Metro region, let’s talk! We know how to address all of the hurdles that you’ll face with buying a home and would love the opportunity to work with you. Call or text (704) 491-3310 or email DebeM@remax.net
© Debe Maxwell | The Maxwell House Group | CharlotteBroker@icloud.com | What if the Appraisal Comes in Lower than the Contract Price?