How often does an appraisal come in low?
An appraisal coming in low is a common concern for both home buyers and sellers. In the real estate market, an appraisal is an estimate of a property’s value conducted by a licensed appraiser. The appraiser takes into account various factors such as the property’s location, size, condition, and comparable sales in the area.
So, how often does an appraisal come in low? The frequency of appraisals coming in low can vary depending on different factors such as the state of the market, the accuracy of the initial listing price, and the competency of the appraiser. On average, about 10-20% of appraisals come in lower than the agreed-upon purchase price.
It’s essential to understand the reasons why an appraisal may come in low and how to navigate this potential hurdle in the home buying or selling process. Here are some related frequently asked questions and their answers:
1. Why do appraisals come in low?
Appraisals can come in low due to a variety of reasons, including errors in the appraisal report, lack of comparable sales data, or overpricing of the property.
2. Can a low appraisal kill a deal?
A low appraisal can potentially kill a deal if the buyer is unable or unwilling to cover the difference between the appraised value and the agreed-upon purchase price.
3. Can you challenge a low appraisal?
While challenging a low appraisal can be challenging, it is possible to request a reconsideration or provide additional evidence to support a higher valuation.
4. What are the consequences of a low appraisal for the buyer?
For the buyer, a low appraisal could mean having to come up with additional cash to cover the shortfall between the appraised value and the loan amount.
5. What are the consequences of a low appraisal for the seller?
For the seller, a low appraisal could lead to having to lower the price of the property, renegotiate with the buyer, or putting the property back on the market.
6. How can sellers avoid a low appraisal?
Sellers can avoid a low appraisal by researching the market, ensuring the property is well-maintained, providing the appraiser with relevant information, and pricing the property accurately.
7. Can a seller challenge a low appraisal?
While sellers may not be able to challenge a low appraisal directly, they can provide the appraiser with additional information or request a second appraisal.
8. Can a buyer still buy a home with a low appraisal?
A buyer can still buy a home with a low appraisal if they are willing to cover the difference between the appraised value and the loan amount or negotiate a lower purchase price with the seller.
9. How can buyers protect themselves from a low appraisal?
Buyers can protect themselves from a low appraisal by including an appraisal contingency clause in the purchase agreement, conducting thorough research, and working with an experienced real estate agent.
10. What if the appraised value is lower than the seller’s asking price?
If the appraised value is lower than the seller’s asking price, the buyer and seller may need to renegotiate the purchase price or find alternative solutions.
11. Can an appraisal be contested?
While it is possible to contest an appraisal, it can be a complicated and lengthy process that may not always result in a higher valuation.
12. How long is an appraisal valid for?
An appraisal is typically valid for up to six months, but the validity period can vary depending on the lender’s requirements and the state of the market.