When you’re in the process of buying a home, receiving a low appraisal value can be a major setback. An appraisal is an evaluation of a property’s value conducted by a licensed appraiser, and it’s a critical component of the mortgage process. If your appraisal comes back lower than expected, you may feel like your dream of homeownership is slipping away. However, it’s important to know that you have options. Here are a few things you can do if you receive a low value on your appraisal.
1: Revisit the Comps
Your appraiser will use comparable sales (comps) to help determine the value of your home. However, they may not always have access to the most recent data. If you believe that your home is worth more than the appraisal value, take a closer look at the comps. Are there any recent sales that are comparable to your home that weren’t included in the appraisal report? If so, you may be able to provide this information to your appraiser and ask for a reconsideration of the appraisal value.
2: Renegotiate the Purchase Price
If the appraisal value is significantly lower than the purchase price, you may be able to renegotiate the purchase price with the seller. This can be a difficult conversation to have, but it’s important to remember that the seller may be motivated to sell and may be willing to lower the price to keep the sale on track. Your real estate agent can help you navigate this negotiation.
3: Pay the Difference
If you’re committed to buying the home and you’re able to do so, you may consider paying the difference between the appraised value and the purchase price out of pocket. This is known as a “low appraisal addendum,” and it allows you to move forward with the purchase without requiring the seller to lower the price.
4: Walk Away
If the appraisal value is significantly lower than the purchase price and you’re unable to renegotiate or pay the difference, you may need to walk away from the deal. While this can be a difficult decision, it’s important to remember that a home is a major investment and you don’t want to overpay for a property that may not be worth the asking price.
In conclusion, receiving a low appraisal value can be discouraging, but it’s important to remember that you have options. By revisiting the comps, renegotiating the purchase price, paying the difference, or walking away, you can make an informed decision that’s right for you. Working closely with your real estate agent, mortgage lender, and appraiser can help you navigate this process and find the right path forward.