Sellers: How to respond to a lower appraisal value
We are in such a HOT market! With that, many buyers are making offers that are significantly above list price. If they are financing their purchase, their lender will order an appraisal (third party valuation of the property) and they have the ultimate say so of the value.
In some cases, an appraiser may determine that the value of the property is actually lower than the contract. Here’s how you’ll want to respond if this happens to you as you sell your home.
- Review the report with your agent – Carefully review all of the details in the report. Your agent should be able to guide you and comb through it for any errors.
- Pull additional comps – Your agent should search for additional comps that help justify the contract price. Your agent can submit those additional comps to the lender/buyer for reconsideration
- If the appraiser doesn’t adjust their value, you may want to have your agent communicate with the Buyer’s agent to see if they would be willing to make up the difference or split the difference (meaning bring more money to closing)
- If the Buyer can’t split or make up the difference, you may want to just move forward at the appraised value so you can get the deal closed; a delay in closing could cost you even more money. If the appraisal is TOO low for you, you may want to terminate and find another buyer. Although, I would consult with your agent and use that as a last resort
NEW APPRAISAL ADDENDUM – There is a new appraisal addendum that TREC put out that allows buyers/sellers to prepare a response BEFORE the appraisal takes place. This outlines what a buyer/seller will do in the event that an appraisal comes in short. We have started making it a standard procedure to use this document at the initial negotiations of a transaction.
If you have any additional questions or would like to get an idea of what your home is worth, feel free to reach out to us.