WHAT HAPPENS WHEN AN APPRAISAL COMES IN LOW?

WHAT HAPPENS WHEN AN APPRAISAL COMES IN LOW?

You've found the home.

Your offer was accepted.

You're moving toward closing.

Then the appraisal comes back lower than the purchase price.

Now what?

First, don't panic.

A low appraisal doesn't automatically mean the transaction is over.

The next step depends on the contract, financing and circumstances of the transaction.

There may be several possibilities.

The parties could potentially renegotiate the price.

The buyer may decide to bring additional funds, depending on the situation and loan requirements.

The seller may agree to adjust the price.

There may also be other options depending on the specific contract and financing.

Why does the appraisal matter?

When financing is involved, the lender wants to understand the property's value as part of the lending process.

That's why buyers and sellers shouldn't assume that an accepted offer automatically means the property will appraise at that price.

The important lesson:

The contract price and appraised value are not necessarily the same thing.

If the numbers don't line up, the transaction may require another conversation.

This is one reason understanding the contract and working with the appropriate professionals throughout the transaction matters.

Real estate isn't always a straight line from offer to closing.

Sometimes the numbers change.

The key is knowing what your options are.