Most buyers use a lender when purchasing a home, and that lender will require an appraisal to ensure that it’s worth what they’re lending. Once the appraisal comes back, the lender will either verify or deny the appraisal.
An appraisal is an important part of any real estate transaction. However, do you know what happens when your home doesn’t appraise? Let’s use a scenario to help you better understand the process.
If a home is listed at $250,000 and the appraisal comes in at $245,000, for example, here are some of your options.
First, the buyer can make up the difference in cash to make sure that they get the home. Another option is to negotiate to meet in the middle of that $5,000. The seller would come down $2,500 in price in that case, and the buyer would come with an additional $2,500 in cash.
If that doesn’t work, the seller can accept the appraised value at $245,000 and lower the price of their property accordingly. If they don’t, and all other options have been exhausted, the buyer can walk away from the contract without penalty.
If a property is receiving multiple offers and the seller can’t come to an agreement with a buyer because of a low appraisal, they can move forward with a backup offer. Depending on the type of loan, the appraisal will stay with the property for up to six months.
It’s important to work with a professional who knows how to navigate through these scenarios. If you have any questions for me in the meantime, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.