Here are the five options you have if the appraisal comes in too low.
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You’ve likely already heard me talk about the current insane real estate market; sellers are usually receiving multiple offers and prices are getting bid up. However, sellers frequently ask what they should do if the appraisal comes in short of the contract price, which is more common when prices are bid up so high. You have several options you can negotiate for in those circumstances:
1. Sell at the appraised price. You can agree to sell at the appraised price, even though it’s less than the contract price.
2. Compromise between prices. This means finding a price between the contract and appraised prices. In this case, the buyer has to be prepared to bring the difference between what the lender will lend them and the new agreed-upon price.
“A low appraisal happens more when prices are being bid up so high.”
3. The buyer withdraws. You can let the buyer withdraw from the contract. You’ll put the house back on the market and look for another buyer.
4. Not contingent upon appraisal. You can write into the contract that the deal isn’t contingent on the appraisal, which means the buyer needs to bring the funds to make up the differences between the two prices. You need proof that the buyer has those funds before making this agreement.
5. Send better comps. You can attempt to send better comps to the appraiser to see if they’ll change their appraisal. However, they’re rarely willing to do so.
If you have questions about low appraisals or any other real estate matter, give us a call or send an email. We would love to assist you.