When you’re buying or selling a home, an appraisal is an essential step in the process. An appraisal is an estimated value of a property based on various factors such as location, size, condition, and comparable properties in the area. If the home appraisal comes in lower than the agreed-upon purchase price, it can have significant consequences for both buyers and sellers.
If the home appraisal comes in low, it means that the lender will only approve a loan for the appraised value of the property, not the agreed-upon purchase price. This can lead to various outcomes depending on the specific situation:
1.
Can buyers still buy the home if the appraisal comes in low?
Yes, buyers can still buy the home if the appraisal comes in low. However, they may need to make up the difference between the appraised value and the purchase price out of pocket.
2.
Can sellers still sell the home if the appraisal comes in low?
Yes, sellers can still sell the home if the appraisal comes in low. However, they may need to lower the price to match the appraised value or negotiate with the buyers.
3.
Can the appraisal be contested?
Yes, the appraisal can be contested if there are errors or inaccuracies in the appraisal report. However, it’s essential to have valid reasons supported by evidence.
4.
Will the buyer be able to get financing if the appraisal comes in low?
The buyer may have difficulty getting financing if the appraisal comes in low since lenders typically only approve loans based on the appraised value of the property.
5.
Can the seller challenge the appraisal?
Sellers can challenge the appraisal by providing additional information or evidence that supports a higher property value. However, the outcome is not guaranteed.
6.
Will the buyer lose their earnest money if the appraisal comes in low?
Whether the buyer loses their earnest money depends on the terms of the purchase contract. If the contract includes appraisal contingencies, the buyer may be able to renegotiate or walk away without losing their earnest money.
7.
Can the seller refuse to lower the price if the appraisal comes in low?
Yes, the seller can refuse to lower the price if the appraisal comes in low. However, this may jeopardize the sale if the buyer is unable or unwilling to make up the difference.
8.
Can the buyer request a second appraisal if the first one comes in low?
Buyers can request a second appraisal if they believe the first one was inaccurate or flawed. However, the lender may have specific guidelines regarding second appraisals.
9.
Can the appraisal value be negotiated between the buyer and seller?
The appraisal value is typically non-negotiable between the buyer and seller since it is conducted by a third-party appraiser hired by the lender to determine the property’s value.
10.
What are some ways to prevent a low appraisal?
To prevent a low appraisal, sellers can ensure the property is well-maintained, provide information on recent upgrades or improvements, and supply the appraiser with comparable sales data that may support a higher value.
11.
Can the buyer walk away if the appraisal comes in low?
Yes, buyers can walk away if the appraisal comes in low, especially if the purchase contract includes contingencies that allow them to do so without penalty.
12.
Can the seller relist the home at a higher price if the appraisal comes in low?
Yes, the seller can choose to relist the home at a higher price if the appraisal comes in low. However, this may deter potential buyers who are unwilling or unable to pay the higher price.