Low appraisals are becoming more of an issue, so here’s how to deal.
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Appraisals may become increasingly difficult in 2021. Due to the increasing prices in 2020 and 2021, we’re beginning to see some contracts come back appraised below the agreed-upon price. This could have happened because multiple buyers bid up the price.
A recent appraisal for one of my clients came back 15% below the contract price. A 15% difference in price is substantial when, for example, we’re discussing a $500,000 home that could have a $75,000 swing in price. So how do we deal with low appraisals in this current market? There are a few things you can do when making an offer to still get the house should a low appraisal happen.
Appraisals may become increasingly difficult in 2021.
First, you can remove the appraisal contingency in your offer, which may make the seller more likely to choose your offer. Or, you can write in an addendum stating that you agree to pay X dollars toward the purchase price to make up some of the difference should the appraisal come in low. Having to do these things isn’t very common; you’ll see this when the market is red-hot or in price ranges where many people are trying to get the property with a conventional loan (higher price ranges).
If you’re curious about what your home may be worth in the present market, give us a call or visit our website and click on the home valuation tool. Also, reach out if you have any questions. My team and I are on standby seven days a week from 9 a.m. to 8 p.m. to help you. We look forward to hearing from you soon.