If your home doesn’t appraise, what do you do? Here’s my professional advice.
What can a seller do if their home fails to appraise?
This is something that occurs fairly frequently in a downmarket, but it can also happen in an upmarket like ours.
For example, we listed a home and got it under contract at $100,000, but the appraisal came back at $90,000. In that scenario, we had a couple of different options:
If the loan that was done to purchase that property was an FHA loan, the appraisal would have stuck to the property for another 90 days. That means if a buyer walks away, you can just immediately turn around and sell it to another FHA buyer; you’d have to wait the 90 days and then put it back on the market. Most people don’t want to do that.
If the loan was a conventional loan, you could challenge the appraisal and order a new one, or else find another conventional buyer.
The third option would be to negotiate with the buyer to make up the difference. Now, the buyer’s bank would only structure a loan around the purchase price of $90,000, but they’re not telling the buyer that they can’t pay the seller an extra $10,000. Believe it or not, we’ve seen that happen. Sometimes, people target a house for a specific reason and don’t really care about the appraisal. They’ll get their loan and then pay the difference in cash.
Obviously, we agents try to get our buyers the best deal, but sometimes appraisals do come in wrong. With that in mind, we also have to be conscious of the loan type and the other options available to the seller.
If you have any questions about incorrect appraisals or how to deal with them, don’t hesitate to reach out to us. We’d be happy to help you examine your options moving forward.