What happens when the appraisal is less than the offer?

What happens when the appraisal is less than the offer?

When the appraisal comes in lower than the offer on a house, it can throw a wrench in the homebuying process. This is because most lenders will only lend money based on the appraised value of the property. So, if the appraisal is less than the offer, the buyer might need to come up with more cash to cover the difference, renegotiate the price with the seller, or walk away from the deal altogether.

One of the most common questions that arises in this situation is what happens next. Here are some related FAQs to help you understand the implications of a low appraisal:

1. Can the buyer still get a loan if the appraisal is less than the offer?

Yes, the buyer can still get a loan, but the lender will typically only lend up to the appraised value of the property. The buyer will need to come up with the cash to cover the difference, renegotiate the price with the seller, or walk away from the deal.

2. Can the buyer challenge the low appraisal?

Yes, the buyer can challenge the low appraisal, but it can be a lengthy process and there’s no guarantee that the appraisal will be changed. It’s important to have solid evidence to support the challenge.

3. Can the seller lower their price to match the appraisal?

Yes, the seller can choose to lower their price to match the appraisal if they’re willing to do so. This may help keep the deal alive, but it’s ultimately up to the seller.

4. Can the buyer and seller split the difference in the appraisal value?

Yes, the buyer and seller can negotiate to split the difference in the appraisal value. This can help both parties come to a mutual agreement and keep the deal moving forward.

5. Can the buyer ask for a second appraisal?

Yes, the buyer can ask for a second appraisal, but it’s unlikely that the lender will accept the new appraisal unless there are compelling reasons for the first appraisal to be considered inaccurate.

6. Can the buyer walk away from the deal if the appraisal is low?

Yes, the buyer can walk away from the deal if the appraisal is low. This is why it’s important for buyers to include appraisal contingencies in their purchase contracts.

7. Can the buyer lose their earnest money if the appraisal is low?

The buyer may lose their earnest money if they choose to walk away from the deal due to a low appraisal. This is why it’s important for buyers to carefully consider their options before making a decision.

8. Can the seller terminate the contract if the appraisal is low?

If the contract includes a financing contingency that is dependent on the property appraising at or above the purchase price, then the seller may have the right to terminate the contract if the appraisal is low.

9. Can the buyer request a list of comparable sales used in the appraisal?

Yes, the buyer can request a list of comparable sales used in the appraisal to better understand how the appraiser arrived at their valuation. This information can be helpful in determining if the appraisal was accurate.

10. Can the seller get a second opinion on the appraisal?

Yes, the seller can get a second opinion on the appraisal, but it’s important to note that appraisals are subjective and can vary depending on the appraiser’s methodology and experience.

11. Can the buyer request a reassessment of the property by the appraiser?

Yes, the buyer can request a reassessment of the property by the appraiser, but there’s no guarantee that the reassessment will result in a higher valuation. It’s important to have valid reasons for requesting a reassessment.

12. Can the parties renegotiate the terms of the contract if the appraisal is low?

Yes, the parties can renegotiate the terms of the contract if the appraisal is low. This can include adjusting the purchase price, splitting the difference in the appraisal value, or coming up with creative solutions to keep the deal alive.

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