What Can I do if My Home Appraisal is Low?

The number of appraisal complaints have risen in recent years due to decreasing home values that began back in 2007 and continued after the Home Valuation Code of Conduct in 2009.  Although the market is more stable, you can still get caught in a sticky situation if your appraisal comes in low.  

The job of an appraiser is to gather information, analyze it and make a report.  A low appraisal may not be inaccurate, but it can prevent a lender from approving a loan for the home. An appraisal is a report of the value of a home compared with comparable properties in the surrounding area.  Finding comparable properties can be tricky and cause a lower appraisal, especially if you are in a neighborhood with foreclosures or short sales.  Another factor is that your neighborhood does not have a comparable home and they are forced to look at surrounding areas where market conditions are not the same.

How to challenge a low appraisal

The appraisal dictates the amount of money lenders are willing to lend to a borrower - if the amount is less than the pre-approved loan amount, then lender cannot approve the loan.  However, there are some things that can be done to salvage the agreement.
  1. Cancel the contract.  Most contract have an appraisal contingency that allows buyers and sellers to cancel if the appraisal is too low.
  2. Negotiate a new deal - Many times a low appraisal will give a buyer the upper hand and allow them to  negotiate a lower price on the home.   
  3. Pay Extra - Regardless of the appraisal, sometimes the home is your DREAM home and you Want it!!  With that being said, a buyer can choose to simply pay additional cash in order to meet the agreed upon sale price.
  4. Challenge the paperwork.  Typically the buyer pays for the appraisal and can request a copy for review.   Real estate agents and the buyers would need to provide fact about the comps or point out mistakes if they want the challenge to be re-worked.  For example, perhaps the appraisal lists the wrong number of bedrooms or square footage of the home.
  5. Request a second appraisal - If you challenge the appraisal and you still are not happy, you can choose to request that you lender get a second appraisal.  Explain why you are asking for  a second appraisal and request competent appraiser with geographical knowledge of your area
We hope this information about low appraisals is helpful to you!  The Team at Gattermeir Davidson Real Estate believes that knowledge is your best tool as you venture towards purchasing a Lake of the Ozark Home.   

Gattermeir Davidson Real Estate, LLC
752 Bagnell Dam Blvd., Suite A
Lake Ozark, MO 65049

Office | 573.365.1555
Fax | 573.365.1766
Mobile | 573.746.0133



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2011 REALTOR Salesperson of the Year
Missouri Association of Realtors

LICENSED IN THE STATE OF MISSOURI
Location: Lake Ozark, MO 65049, USA

Comments

  1. UnknownOctober 31, 2013 at 5:09 AM

    Nice post. Thank you for sharing with us!!
    Will keep these tips in mind when i face a low appraisal in future.

    ReplyDelete

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