Facebook
X
Pinterest
Copy Link
You found the Southern California home of your dreams. So, you put in an offer. Happily, the seller accepted the offer. Now, you enter escrow. There’s nothing to do now but wait, right? Unfortunately, no…at least not if you plan on borrowing money to pay for your home. Lenders do not approve mortgage loans for more than the appraised value. But if your home appraisal comes in on the low side, that doesn’t necessarily mean that the sale is sunk. On the contrary! You have options.
How to Handle a Low Home Appraisal
Appeal
Your first option is to appeal the appraisal. This happens a lot in real estate. If your agent genuinely believes that the house is worth more, they could make a case for a higher appraisal. First, request a copy of the appraisal. Then, look for any errors on it. While it is not unheard of to appeal the appraisal, your chances of success may be low. Why? Because a third party completes the process using unbiased criteria. But it might be worth the effort. Talk to your Southern California REALTOR® to determine if this option is viable for your situation.
Get a Second Opinion
If you received a serious diagnosis from your doctor, you’d want to seek out a second opinion before beginning treatment, wouldn’t you? Well, while a low home appraisal may not be as serious as that, you should consider paying for a second appraisal. While the criteria for an appraisal may be unbiased, the experience of the appraiser may vary. And because of that, one appraiser may value the property differently than another appraiser.
Negotiate
Another option? Negotiate a lower sale price. After all, the seller will surely come up against the same issue with a future buyer. But, as you can imagine, this is not an option sellers are too keen to embrace.
Put Up More Cash
Yet another option is to put up more money. If you really want this home, you might want to dig even deeper into your savings to offset the difference between the appraised value and the sale price. This money increases your down payment. Then, the lender may be more open to approving your loan.
Walk Away
Finally, if the home appraisal comes in really low, your best option may be to simply walk away. However, make this your last resort. Consider trying any or all of the other options first. And always talk to your REALTOR® before deciding how to proceed when you receive a low appraisal.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
