What happens if home appraisal is lower than sale price?

When a home appraisal comes in lower than the sale price, it can cause a variety of issues for both the buyer and the seller. The appraisal is an important step in the home buying process, as it helps determine the fair market value of the property. If the appraisal is lower than the agreed-upon sale price, it can lead to several potential outcomes.

One possibility is that the buyer will need to come up with additional funds to cover the difference between the appraised value and the sale price. This could mean making a larger down payment or securing additional financing. If the buyer is unable or unwilling to do so, the sale could fall through, leaving the seller back at square one.

Another option is for the seller to lower the sale price to match the appraised value. While this can be a bitter pill to swallow for the seller, it may be necessary in order to keep the deal alive. If the seller is unwilling to lower the price and the buyer cannot make up the difference, the sale may be canceled.

In some cases, the buyer and seller may be able to negotiate a compromise. This could involve splitting the difference in price, with both parties agreeing to a new sale price that falls somewhere between the appraised value and the original sale price. This can be a win-win solution that allows the sale to proceed without putting too much financial strain on either party.

Ultimately, what happens if a home appraisal is lower than the sale price will depend on the specifics of the situation and the willingness of both parties to negotiate and compromise. It’s important for buyers and sellers to be prepared for the possibility that the appraisal may not align with their expectations and to have a plan in place for how to handle it if it does.

FAQs:

1. Can a buyer still purchase a home if the appraisal comes in lower than the sale price?

Yes, a buyer can still purchase a home if the appraisal comes in lower than the sale price. They may need to come up with additional funds or negotiate with the seller to make up the difference.

2. Is it common for home appraisals to come in lower than the sale price?

It is not uncommon for home appraisals to come in lower than the sale price, especially in a competitive market where prices may be inflated.

3. Can a seller refuse to lower the sale price if the appraisal is lower?

Yes, a seller can refuse to lower the sale price if the appraisal is lower. However, this may result in the deal falling through if the buyer is unable or unwilling to make up the difference.

4. Can a buyer appeal a low home appraisal?

Yes, a buyer can appeal a low home appraisal by providing additional information or evidence to support their case. However, there is no guarantee that the appraisal will be changed as a result.

5. How can a seller dispute a low home appraisal?

A seller can dispute a low home appraisal by providing their own evidence or hiring a second appraiser to evaluate the property. However, there is no guarantee that the appraisal will be changed as a result.

6. Can a buyer walk away from a home purchase if the appraisal is low?

Yes, a buyer can walk away from a home purchase if the appraisal is low, especially if they are unable or unwilling to make up the difference in price.

7. Does a low home appraisal affect the buyer’s ability to secure financing?

Yes, a low home appraisal can affect the buyer’s ability to secure financing, as lenders typically only lend based on the appraised value of the property.

8. Who pays for the home appraisal?

The buyer typically pays for the home appraisal as part of the closing costs, but it can vary depending on the terms of the purchase agreement.

9. Can a buyer get a second appraisal if the first one is low?

Yes, a buyer can request a second appraisal if they believe the first one was inaccurate or unfair. However, the lender may not always accept the second appraisal.

10. How long is a home appraisal valid for?

A home appraisal is typically valid for 120 days, but this can vary depending on the lender’s policies and the specifics of the transaction.

11. Can a seller back out of a deal if the home appraisal is low?

Yes, a seller can back out of a deal if the home appraisal is low, especially if they are unwilling to lower the sale price or negotiate with the buyer.

12. How can buyers and sellers protect themselves from a low home appraisal?

Buyers and sellers can protect themselves from a low home appraisal by having realistic expectations, being prepared to negotiate, and working with experienced real estate professionals throughout the process.

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