In 2022, selling your home can feel like you have a lot of leverage from beginning to end, but there are still hurdles to jump through to make the entire transaction a success. Let’s take a look at one of the biggest obstacles standing in your way by examining 3 things you can do if you receive a low appraisal for your Redlands house.
Why Does the Appraisal Matter?
First and foremost, we need to have an understanding of what the appraisal actually is and why it affects anything at all.
An appraisal is a review of your home’s features and condition to help determine the fair value it could command on the open market. The appraiser is trained to factor in these features and then look at current market trends to then come down to that estimated market value. The appraisal is intended to be a pretty comprehensive evaluation of your property as a whole.
If your buyer has offered an astronomical price and you receive a significantly low appraisal, you’re likely in a nasty position. The reason for this is the buyer is almost certainly looking to secure a home loan through a mortgage lender, and the lender isn’t keen on approving the loan for that astronomically high price if an appraiser is telling the lender that the property is not worth that much.
The buyer’s lender could then be stuck with a lower value property they can’t recoup the expenses on if the buyer happens to default on their mortgage payments. The end result in this case is the buyer’s loan is denied, they have no financing, and your home’s sale is dead in the water.
Go Through the Appraisal Report
Now that we have a decent grasp of both what an appraisal is, and the purpose it serves, what do we do if the appraisal comes in low?
No matter the results of your appraisal you should sit down and carefully go through the complete report from front to back. Check every detail to ensure no mistakes were made and that your home has been represented and analyzed accurately.
You won’t have much of a case in the event you believe something should be valued more or less than the report states, but you could definitely dispute the report if it contains glaring errors.
Request a Do-Over
If the first appraisal comes back low, you do have the option of requesting a second appraisal be performed by a different appraiser.
This is usually a route taken if there are concerns with the first appraiser’s competency, experience, and qualifications. This second chance is when you want to pull out all the stops and prepare every square inch of your home as best you can.
Deep clean everything, make any quick repairs you might have neglected previously, and hopefully the numbers come back a bit more in your favor.
Let’s say both of your appraisal reports are entirely correct and there’s still a serious value deficit, where do you go from there? Since their lender will only approve a loan up to a certain amount that doesn’t cover the entire sale price, the buyer does have the choice to pay out of pocket for the difference between the appraisal and their offer, but this isn’t a common solution.
Instead, the failsafe can be a bit awkward but it is the quickest way to turn things around: renegotiate.
Hopefully, it will never come to this as you will have another buyer prepared to step in, but you can always bring the price down to a point the buyer can afford if absolutely necessary.
Help When You Get a Low Appraisal When Selling in Redlands
Getting a low appraisal can be frustrating, but you can get help by contacting our team of skilled professionals at (951) 232-9704!