Saving A Transaction From Low Appraisal

Though the weather might not be hot at the moment, the housing market sure is! Pack your bags because now is the time to take a trip into reality. Stop reminiscing about your dream home, make it happen! Preparation and knowledge are key factors during the  process, so let me provide you with all of the information you’ll need to be aware of. A hot market does in fact call for properties to either be listed at a higher price or offers are sent in way over asking. Though money is the driving force of life, this mindset is not always the best to have when Real Estate is factored into the equation. Whether it’s on the sellers or buyers end, if a certain number is exceeded, hurdles will be encountered, such as issues with low appraisal. No one wants to deal with that set-back, but it could definitely happen. Don’t worry, it wouldn’t be the end of the world as long as you follow these simple steps:

1. Use A Trusted Lender

Using a trustworthy and reputable mortgage lender is very important. If you are not too familiar with anyone specific, your realtor definitely has some top picks in mind. It is better to have him/her advise you rather than using a bank or corporate sized lender. You are just another file to them. They are dealing with a countless amount of people daily and the chances of you being prioritized are slim to none. On the other hand, your realtor only wants the best for you, so they would make sure to stay on top of the lender to ensure that there are no hiccups during this part of the transaction. Although appraisers are not guaranteed, we tend to notice that the appraisers our lenders use are familiar with the local area, which is a critical factor when evaluating the price of the home. At any point, you have the opportunity to switch lenders, so don’t be afraid to present your dissatisfaction to your realtor. 

       2. Have Some Cash On The Side

When submitting an offer, buyers have the option to indicate that they are willing to put out an “X”  amount of dollars if the home happens to be under appraised. This is beneficial to the sellers as it lets them know that the buyer is dedicated and serious, giving them a peace of mind. It also helps the buyer by putting a cap on the amount they will have to put out of pocket thus eliminating the need for negotiation down the line. Consult with your realtor and lender to determine what number works best for you. 

       3. Make Sure Your Realtor Is Present For The Appraisal

A list of comparable sales can be provided to the appraiser and other important details can be pointed out as well. Providing comps to the appraiser not only makes their job easier, but it also helps the transaction by guiding it into the right direction. If the appraiser selects homes on their own that they believe are comparable, they may not be taking into consideration any new renovations or details that can significantly increase a home’s value. Remember, a happy appraiser is more likely to meet your numbers than one who is just there to get the job done and over with. It’s common business etiquette for your realtor to be there for the appraisal. If not, you aren’t in  a committed relationship, so feel free to part ways..it’s not you, it’s them. Break hearts, not deals!

Oh No, You Under Appraised And Are Reading This Now?!

Instinctively, when an outcome is different than what’s expected, negativity will outweigh positivity, but there is no need for that here. There are many ways to save the deal. First things first, try to negotiate with the seller and buyer on an agreed median. Look back at your inspection negotiations, if the sellers agreed to fix most items or provided credit, maybe think twice about that and see if you could put that money towards the appraisal instead. If that’s not the route you’d like to take, the buyer can always propose to make up the difference between the appraisal value and the sale price in cash. Your realtor can also contact the lender to see if there are any drastic misalignments with the comparable analysis. Again, what may seem like a minor detail about a home can completely alter the value, whether it’s for the better or worse. If there’s a will, there’s a way. No need to stress, your realtor will help you determine what the best course of action is under any given circumstance.