Avoid Appraisal Issues

What happens if the appraisal comes in low? Can I still purchase the home?

Whenever a buyer is securing a loan to purchase a home, their lender will order an outside appraisal to confirm the value prior to making the loan. If the appraised value comes back at the contract price or higher, then the process goes forward. If the appraisal comes in lower, then there are four options on the table.

First, all parties can agree to terminate the contract at no penalty or cost to the buyer. In other words, everyone simply goes their own way.

Second, the seller can agree to reduce the sale price to the appraised value and leave all other terms and conditions the same.

Third, the seller can agree to reduce the sales price to the appraised value and re-negotiate some of the other terms of the contract.

Fourth, the buyer and seller can agree to split the difference between the two values, with the seller agreeing to a price reduction and the buyer agreeing to bring a little extra funds to closing.

A low appraisal does not have to be the end of the deal. There are several options available to the buyer and seller if all parties are willing to work it out.