Sellers: what do you do if your appraisal comes in low?

If your appraisal comes in lower than your listing price, you have five options for recourse:

1. Look for mistakes. The appraiser might have made a mistake with the square footage, number of bedrooms/bathrooms, or they even might have simply missed certain features of the home. Drive-by appraisals where the appraiser sits out in front of a home and looks at pictures from comparable sales to establish a price aren’t common, but they can happen when things get busy.

2. Ask for a reconsideration. Look at the comparable homes the appraiser used to price your home. Are they up to date? How long ago were they sold? Be sure to look at all of that information because the appraiser may have miscalculated. Your agent should be able to provide the appraiser with the comps you and your agent used to come up with your listing price.

“The appraiser may have miscalculated, so be sure to review all the information.”

3. Request a new appraisal. The problem with asking for a new appraisal is that it will cost money, and in normal situations, the buyer is the one responsible for paying for the appraisal because it’s for their bank financing. As a seller, you may need to negotiate with the buyer to help them with that cost.

4.  Renegotiate with the buyer. You could accept the appraisal and then negotiate with the buyer; it depends on how big the gap between the sales price and the appraised value is, as well as how much extra money your buyer can come up with to fill in the gap. You might take a lower price, but if you don’t, your buyer will likely cancel the transaction, and knowing that they had an appraisal contingency, you’re obligated to give them back their deposit.

5.  Kill the sale and relist your home. However, if you have an FHA appraisal on file, it will stay with your house for a certain period of time. But a new buyer will get a new appraiser and appraisal.

While establishing the price to sell your home is your decision and yours alone, your Realtor should do an excellent job of educating you about the market, current values, and how to properly price your property. With inventory rising and thus your competition, pricing your home right from the beginning will help you avoid appraisal hiccups like this.

If you would like more information or have any other questions about real estate, please feel free to reach out to me. Hope to hear from you soon!