One of the most devastating problems a homeowner and the buyer attempting to purchase the home may run up against is a low appraisal. Luckily, there are several ways of dealing with the situation.
- Challenge the Appraisal
Appraisers sometimes make errors. When confronted with a low appraisal it’s important to ensure that the appraiser had the correct information about the home. If you paid for the appraisal you can request a copy of it. Otherwise, we’ll need to have the buyer make the request.
When reviewing the appraisal we’ll first look for errors in the description of your home. Sometimes a bathroom is left off the appraisal report or the square footage is inaccurate. We’ll check to ensure that you were given credit for improvements that should increase the home’s value.
We will also check the comparable homes the appraiser used in making the determination of your home’s value, looking for similar errors.
Armed with evidence of an incorrect appraisal, the buyer can then approach the lender and ask for a review in light of this additional information. If that doesn’t work, the buyer can ask the lender for a second appraisal.
It’s not common for lender’s to accept challenges to appraisals. If the reasons are compelling, however, and obvious mistakes were made, there’s a good chance your appeal will be heard.
- Lower the Price of the Home
If it appears that the appraiser is correct in his or her estimation of the home’s value and you want to complete the transaction, you may want to consider lowering the price of the home to meet the appraised value.
Yes, it’s frustrating to have a buyer agree with you on the home’s value only to have a third party come in and tell you that you’re both wrong. But it’s a safe bet that the next buyer’s lender will come up with a similar value so you may as well lower the price now.
- Request that the Buyer Meet you Half Way
If you have a motivated buyer, consider lowering the purchase price halfway and request that the buyer increase his or her down payment to the same amount.
This way, both the buyer and the seller compromise and neither side feels cheated.
