When you’re in the process of buying or selling a home, one of the key steps is getting an appraisal. This is an assessment of the property’s value by a licensed professional. However, what happens if the appraisal comes in lower than expected? Here’s what you need to know:
The implications of a low appraisal
When the appraisal comes in low, it can have several implications:
1.
Will the sale fall through?
If the appraisal comes in low, there is a possibility that the sale may fall through. This is because lenders rely on the appraisal to determine the amount of the mortgage they are willing to offer. If the appraisal value is lower than the agreed-upon purchase price, the buyer may no longer be able to secure financing.
2.
Re-negotiation of the purchase price
In some cases, the buyer and seller may choose to re-negotiate the purchase price if the appraisal comes in low. This can involve the seller lowering the price to match the appraised value or the buyer making up the difference in cash.
3.
Additional appraisal or second opinion
If there is a significant discrepancy between the appraised value and the agreed-upon purchase price, either party may request an additional appraisal or a second opinion. This can help to ensure that the appraisal was accurate and unbiased.
4.
Walking away from the deal
Ultimately, if the buyer and seller are unable to come to a new agreement after a low appraisal, either party may choose to walk away from the deal. This can be a disappointing outcome after investing time and money into the transaction.
Common FAQs about low appraisals
5.
Can a low appraisal be challenged?
Yes, a low appraisal can be challenged by providing additional information or data that supports a higher value for the property.
6.
Who pays for the appraisal?
Typically, the buyer is responsible for paying for the appraisal as part of the loan application process.
7.
What factors can contribute to a low appraisal?
Factors that can contribute to a low appraisal include recent sales of comparable properties, the condition of the property, and market trends.
8.
Can the seller appeal a low appraisal?
While the seller does not have a direct appeal process for a low appraisal, they can work with their real estate agent to address any concerns and potentially request a new appraisal.
9.
Will a low appraisal affect my property taxes?
A low appraisal may affect your property taxes if it results in a lower assessed value for the property.
10.
Can I request a copy of the appraisal?
Yes, both the buyer and seller are entitled to receive a copy of the appraisal report.
11.
Does a low appraisal mean the property is overpriced?
Not necessarily. A low appraisal can be the result of various factors and does not always mean that the property is overpriced.
12.
Can I get a refund if the appraisal comes in low?
Unfortunately, appraisal fees are typically non-refundable, even if the appraisal comes in lower than expected.